The Archdiocese of Milwaukee said Friday that its employees' pension
plans are underfunded, confirming one of the fears expressed by Catholic
Church employees since the archdiocese filed for Chapter 11 bankruptcy
protection on Jan. 4.
The
revelation came at a meeting Friday of the archdiocese and creditors -
including clergy sex abuse victims and pension representatives - with
Assistant U.S. Trustee David Asbach.
Archdiocese
spokesman Jerry Topczewski said he could not estimate the extent of the
shortfall, but that it affects only archdiocese employees and retirees -
not those of schools, parishes or other participating employers. He
attributed the shortfall to poor investment performance.
"It's not because we haven't made payments. They're made on time and based on actuarial projections," said Topczewski, one of nearly 5,800 people covered in a pension plan for lay employees throughout the diocese.
"You could
call all kinds of pension funds around town and find a lot are
underfunded," he said.
"All investment stocks took a hit in 2008, and
we're still trying to recover from that."
The archdiocese filed for Chapter 11 bankruptcy protection
earlier this month, saying it is the best way to equitably compensate
victims of clergy sex abuse and maintain the essential ministries of the
church.
Attorney
Daryl Diesing said at the meeting Friday that the archdiocese
participates in four retiree plans: three pension funds for lay workers,
priests and union workers; and a retired priest's health plan.
Topczewski
said the plans are held in trusts and as such are not assets available
to fund a settlement - although that could be challenged by attorneys
for the creditors.
Victims' attorneys did not return telephone calls and e-mails seeking comment.
Employees concerned
Since the filing, Catholic Church employees have voiced concerns that their pensions could be in jeopardy.
Some pointed
to the Diocese of Wilmington, where documents released as part of its
bankruptcy revealed a dramatically underfunded pension plan.
Also, in
Wilmington, the court ruled that millions of dollars in pension funds in
a joint investment account would become part of the diocese's estate.
"These employees are victims as well in all of this," said Nancy Hwa of the nonprofit Pension Rights Center in Washington, D.C.
"A lot of
them worked for decades for the diocese because they believe in the work
it's doing.
It just adds even more betrayal to it all."
The Milwaukee
Archdiocese's plans are not covered by ERISA, the landmark 1974
Employee Retirement Income Security Act meant to protect workers'
pensions.
ERISA imposes
contribution and reporting requirements, and participating plans are
backed by the Pension Benefit Guaranty Corp. should they fail. But
Congress carved out an exemption for religious organizations, Hwa said.
"Very often,
employees might not even realize that a plan's not protected, and they
may not know the level of funding of the plan.
Topczewski said archdiocese employees receive regular updates on the status of its plans.
Asbach, the
assistant U.S. trustee, met privately with creditors on Friday to begin
the selection of a creditors committee, which will represent the
interests of the archdiocese's largest unsecured creditors.
It was not
clear Friday whether Asbach had made his selections, and he did not
return a telephone call to his office.
The committee
will almost certainly include clergy sex abuse victims who have pending
lawsuits against the archdiocese - some of whom traveled from across
the country to attend Friday's meeting.
Diesing said
in the public portion of the meeting that he anticipated six major
creditor groups, including the victims and pension plan participants.
SIC: JSO/USA