Archdiocese of Boston Takes First Step to Reducing Pension Deficit

May 29, 2009 ( - The Archdiocese of Boston, facing a clergy pension system that it warns will run out of money in 2011, is taking its first step to shore up the fund by reducing benefits for priests retired or on leave due illness or disability.

According to the Boston Globe, Cardinal Sean P. O’Malley has mailed to all priests a legalistic 17-page “decree of promulgation” that says they will receive only 60% of their stipend, but continue to receive health care coverage, if they are on health leave. In some cases the policy will require the priests to submit medical and tax documents to the archdiocese in order to “demonstrate need,” the Globe said.

It also requires priests on health leave for more than six months to seek state and federal government assistance, such as Social Security Disability Insurance.

The policy affects only the 40 priests who are currently “unassigned” because they are sick, disabled, or on a leave of absence. The Archdiocese of Boston has 480 active priests, of whom 26 are over age 75 and five are over age 80. The archdiocese also has 275 priests who do not work full time because of age or infirmity.

Retired priests are currently given a $1,288 monthly stipend plus $600 for housing if they do not live in a rectory. The archdiocese asserts that its benefits compare favorably with those of other Catholic dioceses around the country, and pointed out that many private companies have also been scaling back on support for retired workers, according to the news report.

The new policy is the first of three stages in the archdiocese’s latest plan to control benefits costs. The next two stages will concern housing and benefits for other retired priests. At the same time, the archdiocese is also trying to raise money to support the benefits. It plans next month to launch a third annual collection, in addition to the Christmas and Easter collections, to benefit the clergy funds, and later this year plans to launch a major gifts campaign to benefit the funds. In addition, the archdiocese has appointed a new board of trustees to oversee the plan.

Its most recent annual financial report described the clergy pension fund as “our largest liability and most significant financial concern.” The document describes the plan as underfunded by $114 million, and warns that it will run out of money in 2011 unless it is restructured. The archdiocese currently brings in $5.4 million a year from Christmas and Easter collections to support the plan, but spends $15 million a year on benefits, the Globe reported.

Some priests and lay people have questioned how well the Archdiocese of Boston has managed pension funds, according to the Globe. O'Malley proposed a set of benefits cuts to reduce the costs of the clergy pension plan four years ago, but withdrew it after allegations, fueled by the archdiocese's own mailings to priests, that the church had failed to set aside years of Christmas and Easter contributions made by Catholics who were told those collections would support their retired clergy, the news report said.

The archdiocese has repeatedly insisted the funds were properly used, but also agreed to hire an accountant to do a report on the history of the funds in an effort to assuage the concerns - due out in June or July. Archdiocesan chancellor James P. McDonough has said there is no indication of any criminal wrongdoing.

However, among other uses, the funds are believed to have been used in the past to support priests accused of sexual abuse. The archdiocese says that, going forward, it plans to set up a separate account to provide for accused priests, and that the account will be funded through a portion of the proceeds of the sale of the former archdiocesan headquarters property in Brighton to Boston College.