2 large ‘church’ pensions appear safe financially
Status is in contrast with ex-st. Clare’s workers’ problems
Uninsured pension plans — called “church” plans — cover thousands of people in the sprawling St. Peter’s health care system and the 14-county Roman Catholic Diocese of Albany, but workers there can relax, at least for now, as the plans appear financially healthy.
Risks of such pensions, which have no federal insurance to protect workers from financial meltdown, were brought home last month to more than 1,100 workers at the former St. Clare’s Hospital who learned they will get either no pension or a monthly check slashed by 30 percent.
In the Capital Region, uninsured “church” pensions are also in place for at nearly 6,700 workers at two major institutions — St. Peter’s Health Partners, which employs more than 12,500 people across an array of five regional hospitals and associated facilities, and the Albany Roman Catholic Diocese, which runs a network of 26 parochial schools and a charities arm.
These pension funds are much healthier financially than is St. Clare’s, according to officials from the Albany diocese and St. Peter’s Health Partners.
The key to understanding the health of a pension plan is a figure called a target funding percentage. This number is a percentage of what a pension plan expects to need to pay its retirees, and the cash and other assets it has to do that.
A funding percentage of 100 percent means a plan has exactly what it projects to need to pay pensions. A figure above 100 reflects an excess, while a figure below reflects a shortfall.
Last week, the head of the St. Clare’s Corp., which oversees the cash-starved pension plan, said it would need a $29 million transfusion from outside to bring more than 660 people without a pension up to the reduced rate.
When St. Clare’s officials decided to eliminate and slash pensions last month, that fund was at about 35 percent funded, and was poised to run out of money as soon as 2024 if it kept paying pensions unchanged, said St. Clare’s Corp. President Joe Pofit.
For comparison’s sake, the SPHP church pension plan was at 94.5 percent of its projected required funding in June 2018, according to figures released by Corporate Communications Director Elmer Streeter.
And the plan for the Albany diocese was at 96.8 percent funding as of August 2018, according to figures provided by the diocese.
So far, no one has offered to come up with that money to help workers from St. Clare’s, a century-old Schenectady hospital that closed in 2008 as part of a state-ordered consolidation with Ellis Hospital. Bishop Edward Scharfenberger has said the diocese does not have the money to do it.
Long affiliated with the Albany Roman Catholic Diocese, St. Clare’s Hospital officials got federal permission during the 1990s to convert its private, defined-benefit pension into a so-called “church” plan.
That meant St. Clare’s no longer had to meet federal reporting requirements and pay for pension insurance through the Federal Benefit Guaranty Corp. — but the pension also no longer had the protection of that insurance.
Unlike private pensions, church plans face little regulation and no reporting require-
ments under the federal Employee Retirement Income Security Act of 1974, ref lecting a 1990s exemption that ref lects the philosophy that religious institutions serving their missions should be held to a looser standard on worker retirements.
In June 2017, the issue of church pension plans went to the U.S. Supreme Court, which ruled that pension plans sponsored by religiously affiliated nonprofit organizations do not have to be “established” by churches in order to be treated as exempt “church plans” if they meet other requirements.
The federal Pension Benefit Guaranty Corp., which insures the private pensions of 37 million Americans, requires private pension plans that fall below 80 percent funding to undergo additional federal reporting requirements and take other steps to address the shortfall. Credit rating agencies use the 80 percent standard as an indicator of public pension plans’ financial health.
“Our plans have always paid benefits in full to all participants and their beneficiaries — and it is our intent that they will continue to do so in the future,” Streeter said.
The funding ratio for SPHP uninsured pensions was better than an industry average for the nation’s large private pension plans, Streeter said. In June 2018, that average was 88.1 percent, according to a report by the pension actuary firm Willis Towers Watson.
Diocese spokeswoman Mary Deturris Poust said that pension plan covered 3,051 current and former workers at the schools and Catholic Charities.
That plan had $124 million in it as of August, or enough to cover 96.8 percent of its projected current and future obligations, according to data released by her office.
“Our plan is tirelessly maintained, and each year the audit report is presented to Catholic Charities, the diocesan Finance Council, and the trustees of the pension plan,” said Poust.
However, funding ratios are “just snapshots in time,” said David Pratt, a labor lawyer at Albany Law School who is working with the former St. Clare’s workers.
“With the way the stock market has been going, there are a lot of pension plans that were better funded in June than they are right now.” That is because if a pension plan is heavily invested in stocks, and stock values drop, the pension plans funding ratio drops along with it.
Now the Capital Region’s largest private employer, SPHP was created in 2011 through the affiliation of three different health care networks covering four major hospitals and their affiliates, including St. Peter’s in Albany, Albany Memorial in Albany, Samaritan and St. Mary’s in Troy.
The organization is part of three different defined-benefit pension systems depending on where someone works — two pensions that are church-affiliated, and thus, uninsured, and one that is private and insured.
SPHP also runs two definedcontribution retirement plans, where returns fluctuate with market activity and are not covered under federal pension insurance.
Pratt said the various SPHP retirement plans there were a “hodgepodge,” likely ref lecting the merger of systems that were Catholic with those that had no religious affiliation.
Streeter said that SPHP’S uninsured church pension plan, called Catholic Health East Employees Pension Plan, covers about 3,644 current and former workers from St. Peter’s Hospital and nine other affiliated institutions, including Our Lady of Mercy Life Center, Community Hospice and St. Peter’s Nursing and Rehabilitation Center.
The Catholic East Plan covered more than 25,000 workers at Catholic institutions in the eastern U.S., and as of June 2018, had about $863 million in assets, which Streeter said enough to fund 94.5 percent of its current and future obligations.
The other defined benefit pension plan overseen by SPHP is called the Trinity Health ERISA Pension Plan, which is protected by federal insurance.
That plan covers about 4,386 local workers from Albany Memorial Hospital, Samaritan Hospital, The Eddy, and about 20 other affiliated institutions in the Capital Region that were part of the Northeast Health network before the merger.
With about $297 million in assets to cover about 10,530 current and retired workers here and elsewhere, the Trinity plan was at 93.3 percent of its funding target, as of June 2018, said Streeter.
In August 2014, the Catholic Health East pension plan covering St. Peter’s workers merged with Trinity Health Corp., a Michigan-based Catholic health care network which took over responsibility for the pension plan.
Two years later, Trinity agreed to pay $75 million to settle class action claims in federal court that it was underfunding pensions by improperly treating them as “church” plans. Part of that money was put into the Catholic Health East pension plan.
Trinity also agreed to run the pension plans in compliance with certain federal funding requirements and worker protection laws for the next 15 years. Court papers indicated the settlement could benefit some 116,000 people who work for Trinity-affiliated entities spread across 22 states.
There is a third retirement system under the SPHP umbrella for workers at St. Mary’s Hospital, which was part of the Seton Health System.
Streeter said that plan is overseen by St. Louis-based Ascension, the largest nonprofit health system in the U.S. and the world’s largest Catholic health system, with facilities in 23 states and the District of Columbia.
Ascension Senior Marketing and Communications Vice President Nick Ragone would not answer questions about the status and financial condition of the plan that covers workers at St. Mary’s, as well as Schuyler Ridge, a 120-bed skilled nursing facility in Clifton Park.
St. Mary’s workers also operate urgent care centers in Albany, Clifton Park, East Greenbush, Saratoga Springs and Troy.
In 2015, Ascension settled a class action lawsuit that charged it was improperly treating its pension accounts as “church” plans and deliberately underfunding them by hundreds of millions of dollars.
Under the settlement, Ascension made a onetime $8 million payment to its plans, and also agreed to guarantee pensions through June 2022 and issue regular financial notices on the condition of its plans.
In the lawsuit, filed in 2013 by a worker at a Michigan hospital, claims were made that pension plans affecting more than 120,000 Ascension workers across the country were underfunded by $444 million.