La Crosse, Wis., Mar 7, 2018 / 05:08 pm (CNA/EWTN News).- The Diocese of La Crosse has announced that it will end its pension plan for lay employees, but it hopes to preserve almost all the value of promised benefits for hundreds of present and past workers.
“The diocese acknowledges its commitment to its employees and is best delivering on its obligations to all those who have served in its parishes and schools,” the Wisconsin diocese said in a March 7 statement. “At all times the difficult decision was driven by the diocese’s desire to protect as best it can the assets of each of the participating members.”
The diocese said it anticipates that the plan’s termination payouts will be “in the mid-90 percent range of the plan’s total actuarially equivalent value of benefits.”
The beneficiaries of the pension plan included Catholic school teachers, custodians, secretaries, rectory workers and other lay employees in the diocese, which covers 19 counties in west-central Wisconsin, the Leader-Telegram newspaper reports.
“This difficult decision has been made to ensure that all plan participants receive as much benefit as possible,” Bishop Callahan said in a Feb. 27 letter to many diocesan employees. The decision to terminate the lay employees’ retirement plan came “after much analysis, discussion and prayers.”
The pension plan initially was launched in 1974 and was entirely employer-funded. This plan was frozen in 2007 and replaced with a 403(b) retirement plan, to allow employees to prepare for their own retirement. There has been no increase in accrued benefits since 2006. Callahan’s letter said the diocese continued to bill parishes and allocate funds from the diocese’s annual appeal, but the efforts could not fully fund the plan.
The plan’s funds will be distributed in a one-time lump sum payment to those who are eligible, with the amount varying for each individual. The funds will be allocated based on the ratio of available assets divided by total liabilities.
Monthly payments will continue until the final distribution, set for this summer.
“The lay retirement plan is actively providing assistance to our retired past employees, and is holding monies for those who are not retired and have worked during the time it was active,” the diocese’s March 7 statement said.
Many employees of both religious organizations and private businesses have faced shortfalls in planned retirement funds due to “market volatility,” said the diocese, which said the decision aimed to “avoid that distress and best preserve all employees’ retirement funds.”
The payout decision was influenced by “current favorable market conditions” and the trends of similar plans which have shown “substantial risk.”
The single-payment to individuals allows each person to determine the best way to invest or use the proceeds, said the diocese.
“For many in the plan it will be a payout that they can use to provide for themselves, for their children or grandchildren,” the statement said.
The full effects of the change will not be known until May, Mark Gobler, president of the local Regis Catholic Schools system, told the Leader-Telegram.
“It is alarming,” said Gobler, who estimated that over 1,000 people could be affected.
Retired Regis High School teacher Howard Campbell said it was “quite a shock” to receive the letter. After teaching for 40 years, he has worked as a substitute teacher for three years.
“People were relying on that income. Now to have this happen, it was devastating,” he said. Beneficiaries of the fund like Campbell fear the lump sum will be far less in value than the monthly payments.
“We knew it would never be much, but it was just enough to get by on. We relied on it,” he told the Leader-Telegram. “Now people are left wondering: ‘How am I going to come up with $1,000 a month? How am I going to cut back?’”
The diocesan statement “acknowledges that some may view the decision to be one denying them a promise, and the diocese hears and recognizes those feelings.”