NPR ran an interesting story yesterday about the pensions of employees of churches and other religious organizations. The pensions of church-affiliated workers and retirees are not protected because of a little-known loophole in federal pension protections. Church pension plans are not covered by the federal law, and employees of church-affiliated hospitals, publishers, and schools are at risk.
NPR told the story of 500 employees and retirees of the publishing house of the Evangelical Lutheran Church in America who received a lump sum much less than their expected pension payments. Maria Carpitella worked for the Catholic Diocese of Wilmington for 20 years and expected a pension of $400 per month. The diocese, however, was bankrupted by the sex abuse scandal and with its pension account underfunded Carpitella is worried she may not receive her check.
According to NPR, Church plans are exempt because that's the way churches wanted it. Back in the 1970s and 1980s when this was being worked out, religious organizations that offered pensions took the position that they didn't need to be regulated. The groups had always done a good job of paying people what they were owed and they wanted to avoid the additional cost and burden of federal oversight. Plus there was the issue of separation of church and state.
Today there is no way of knowing how many church groups are at financial risk because they have no obligation to report or disclose the status of their pension funding.
Carpitella's husband had a pension with TWA that was insured when the airline ran out of money. She assumed her pension would be treated the same way. That is one of the problems of having separate laws for church organizations. Often employees don't know that their pensions are unprotected, or that they may not enjoy the same legal rights at their jobs that other employees enjoy.
In 2006, the New York Times ran a brilliant series explaining how religious organizations are exempted from numerous laws and regulations. We live in an era of courts and legislatures who are more and more willing to create special rules for religion. The religions' idea seems to be that they should be free from the law because they answer to a higher law; the lawmakers accommodate them. Perhaps the pension lesson from the 70s and 80s will put a brake on the constant religious exemptions from the law.
Carpitella said you trust on blind faith the church will take care of you. But like TWA or Enron, churches fail. The law should be there to protect citizens from the churches' mistakes.