180 employers and 40,000 employees across the country were recently told their pension fund was underfunded and unable to meet future obligations. <\/p>\n
ST. CLOUD, Minn. \u2014 A pension shortfall has some employees of the St. Cloud Catholic Diocese concerned. Many are worried their benefits may be cut and if so, by how much?\u00a0<\/p>\n
\u201cWe’ve been six months in limbo not knowing and it’s been so stressful for so many people,\u201d said Mary Cheryl Opatz, retired teacher and co-chair of a group called Diocesan Pension Concerns Group.<\/p>\n
Last October, some 1,400 employees in the St. Cloud Catholic Diocese got a letter. Their pension fund, run by Christian Brothers Services out of Illinois, was significantly underfunded. Thirty-five million dollars underfunded and unable to meet long-term obligations.<\/p>\n
\u201cOpening that letter, I mean, I have lost a lot of sleep; to be honest I’ve lost a lot of weight. I’ve just been kind of a wreck,\u201d said Mary Goenner, a retired teacher.<\/p>\n
Goenner spent nearly her whole career as a teacher in the diocese. And now she’s one of nearly 300 employees including administrators, youth ministers and other lay people who have formed a group to advocate for themselves.<\/p>\n
\u201cThe present employees who’ve been working for 25, 30 or some even 40 years and they’re looking at retirement, they’re going to be even in worse shape than we will be. And that’s, you know, that’s not right. No, that’s not right,\u201d said Elmer Kobberman, a retired principal in the diocese.<\/p>\n
The group has asked for four things, most importantly, to make sure the pensions are fully funded and people are made whole. They want listening sessions, a seat at the table where decisions are being made, and transparent communication. None of which, they say, has happened.<\/p>\n
\u201cThe one thing that the diocese has said consistently from when they first started communicating with those of us affected is, ‘we didn’t know.’ If they didn’t know, they should have known,” said retired teacher and Diocesan Pension Concerns Group co-chair, Jeff Kaster.<\/p>\n
\u201cHow does something like $35 million go missing? These are the same questions we are asking Christian Brothers,\u201d said Vicar General Fr. Scott Pogatchnik.<\/p>\n
Fr. Pogatchnik says he understands how difficult and scary this is for those impacted, but maintains the diocese didn’t know there was a problem to this degree.<\/p>\n
\u201cWhen 180 organizations learn this news at the exact same time, it tells us it’s not those organizations that were missing something; it’s that the reporting that communication was not clear,\u201d he said.<\/p>\n
And that’s where this gets even more complicated. This isn’t just happening in St. Cloud. One hundred and eighty employers and 40,000 employees across the country found out about the shortfall at the same time. In total, Christian Brothers has an $800 million gap between assets and liabilities. The New Ulm and Crookston dioceses, along with St. Mary’s University and a couple high schools in the state, are also affected.\u00a0<\/p>\n
So how did this happen? Especially at a time when the stock market has been going gangbusters in the last three years. We reached out to Christian Brothers who issued a statement saying in part that they never fully recovered from the great recession of 2008 and “There are far more retirees than active workers contributing into the system,\u201d said Christian Brothers Services Chief Marketing Officer, Terry Arya.<\/p>\n
The fund went from over-funded in 2007 to underfunded after the recession, however, the pension plan lost nearly $150 million that year because of a “reckless strategy” by German-based Allianz Global Investors. Christian Brothers sued Allianz and there was a settlement in 2021.<\/p>\n
When asked how much they got back or if it impacted this shortfall, President and CEO Patrick Lynch said, “The terms of the settlement are subject to confidentiality restrictions. The impact of the Allianz losses and subsequent settlement are incorporated into the Plan’s net returns.”<\/p>\n
How often does this happen and could it happen to you?<\/p>\n
\u201cI think the last time I checked there was only 15% of, you know, private companies that still offer pensions,\u201d said Thomas Schrank, certified financial planner with Northwestern Mutual.<\/p>\n
Schrank says pensions are still popular with unions and government agencies but says there are fewer of them privately because they are expensive to keep going, especially since people are living longer. But there is usually a safety net in place if a pension fund fails.<\/p>\n
“There’s a pension benefit guarantee corporation, PBGC, that these pension funds will just pay a premium into, right, because a pension at its core, it’s run by an insurance company. That’s why they are giving you the guarantee. It is backed by this third party, so if a pension does terminate or freeze, then PBGC can come in and make people whole,\u201d Schrank said.<\/p>\n
This situation is different though; churches are not subject to the same federal protections, leaving the shortfall squarely on the shoulders of the churches and schools impacted.\u00a0<\/p>\n
Those employers were given options: Stay with Christian Brothers and make large contributions for the next 25 years to erase the shortfall or spin off the pension fund and take it over themselves. A spin-off is what St. Cloud has chosen.<\/p>\n
“We are working to remedy this in every way possible and that is still what we are holding ourselves to, is to be able to provide the full benefits to these people who are like my brothers and sisters. These are employees of the schools I’ve had to run, and these are employees of my offices current and retired,\u201d said Fr. Pogatchnik.<\/p>\n
Fr. Pogatchnik says all options are on the table, knowing it won’t be just one thing that will fix the problem. However, that still leaves retirees right now wondering about their futures.<\/p>\n
\u201cI constantly worry about how I’m going to manage if they cut all that. Sorry, I’m going to get emotional about it. It’s so scary for me,\u201d said Goenner.<\/p>\n
And as time ticks by the Diocesan Pension Concerns group worries that legal action against the diocese will be their only recourse.<\/p>\n
\u201cWe don’t want to go down that avenue; everyone loses that way, but we also want to fight for what’s right,\u201d said Kaster.<\/p>\n
Both the Diocesan Pensions Concerns Group<\/a> and the\u00a0Diocese of St. Cloud<\/a> have websites with more information.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"180 employers and 40,000 employees across the country were recently told their pension fund was underfunded and unable…\n","protected":false},"author":2,"featured_media":639978,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,147,530],"class_list":["post-639977","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/639977","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=639977"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/639977\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/639978"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=639977"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=639977"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=639977"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}