CROOKSTON — About five months after lay employees of the Diocese of Crookston
received word their pension plans could lapse,
Bishop Andrew Cozzens says the diocese has landed on a new plan to make sure those benefits aren’t lost, though it will require the parishes and schools within it to take on higher employee benefit costs.
“We have been able to come up with a plan that will allow us to find a way forward and also maintain the benefits of those who have accrued them up to this point,” he said.
With the new plan, the diocese will manage its own retirement plan going forward, Cozzens said.
The diocese is one of 180 Catholic institutions that learned last year its employee pension plan managed by an Illinois-based financial service provider called Christian Brothers Services was underfunded. In the diocese’s case, it would have had to pay $24.6 million over 25 years to cover the shortfall.
CBS has said since that the underfunding in its pension plans — which in total comes to an $800 million shortfall — is because of economic changes and challenges, like the 2008 Recession, as well as an increasing number of retirees on its plans.
Other Minnesota Catholic organizations that were affected by CBS’s underfunding include
St. Mary’s University of Minnesota in Winona and Minneapolis,
the Catholic Diocese of St. Cloud, the Diocese of New Ulm and various Catholic schools.
Since last November, the diocese has formed an ad hoc committee, including local experts and employees as well as national pension experts and attorneys, to brainstorm ways to continue providing retirement benefits.
The new plan is a “spin off” from CBS’s pension plan, meaning the diocese will be managing its own retirement plan going forward, with the parishes, schools and institutions in the diocese putting a percentage of their employees’ income into the new pension account.
“You could think about that like a 30-year mortgage,” Cozzens said. “Basically over the next 30 years, we’ll continue to pay off that liability so that those who have currently accrued pension benefits will be paid in full.”
The Diocese of Crookston includes 65 parishes and eight Catholic schools across 14 counties in northwest Minnesota.
The current pension plan will be frozen once the new plan takes effect.
Cozzens said employees have met the diocese’s new plan with “gratitude and peace,” especially following the anxiety that many felt when CBS’s underfunding was first discovered.
“It will involve some sacrifices from our parishes, schools and institutions, as we will experience an increase in the employee benefit that we offer in order to pay off the past service liability, but because we’re able to spread out that liability over all of our parishes and schools over the whole diocese, we’ll all be in it together,” he said. “When we realized we’re going to be able to do this in a manageable way … that gave a lot of peace to everybody involved.”
He also expressed his gratitude to the people who have helped come up with a new pension plan, as well as for the diocese’s employees, both past and present.
“We have wanted, and will continue, to try to do our best by them,” he said.
Jordan Rusche is the government reporter for the Grand Forks Herald.