Nuns Suing over Pension Benefits

March 25, 2011 (PLANSPONSOR.com) - An order of nuns is suing Cardinal Sean P. O’Malley, the Roman Catholic archbishop of Boston, after years of trying to withdraw from a church-run pension fund.

According to the Boston Globe, the Daughters of St. Paul is a large, international order with about 135 members in the United States. The funds at stake in the lawsuit are not for the nuns’ own retirement, but for the retirement of their lay employees. The order has about four dozen employees and retirees in the Boston area and another four dozen or so nationwide.  

The news report said the nuns have asked the Massachusetts Supreme Judicial Court to order the pension plan trustees, who include O’Malley and several of his top aides, to provide them with a full accounting of the nuns’ portion of the fund, or to rule that the nuns were technically never part of the church-run plan and to order the archdiocese to reimburse the nuns’ contributions, plus returns. The nuns are also seeking attorney’s fees.  

The nuns believe they are owed $1.371 million, based on their estimate of the value of the assets in 2007. But lawyers for the nuns say the archdiocese has contended that the nuns’ assets are worth nearly $500,000 less, because of a sharp decline in the value of the fund since the 2008 stock market downturn. The pension fund was more than 100% funded in 2007 but was only about 83% funded in 2010, according to the archdiocese.  

The Globe reports that the Daughters began contributing in 1989 to the Pension Plan and Trust of the Roman Catholic Archdiocese of Boston, which includes retirement funds for employees of the archdiocese, as well as a number of other Catholic entities. In their lawsuit, they say they asked to leave the archdiocesan fund in 2005 to establish a single pension plan for all their U.S. employees that the Daughters would run themselves.  

Their lawsuit alleges that representatives of the plan were unable to supply data concerning the Daughters’ contributions and earnings required to effectuate the spinoff. The trustees, the lawsuit alleges, never kept separate records for each contributing employer — even though, it alleges, they were required to do so by the document establishing the trust.  

However, Carol Gustavson, the director of benefit trusts and plan administrator for the Archdiocese of Boston, told the Globe the archdiocese was moving ahead with the spinoff when it was dealing directly with the nuns in 2006, but that changed when the nuns’ lawyers became involved. Gustavson also said the archdiocese had the relevant information to make necessary calculations — even if it did not regularly issue separate reports for each employer — and that that information was shared with the Daughters.  

She said the archdiocese and the nuns shared responsibility for what were at times lengthy delays in exchanging information. Only recently, she said, did the nuns supply information the archdiocese requested demonstrating that the Daughters were equipped to oversee their employers’ own pensions — a step the nuns’ lawyers complied with but felt was unnecessary, since many of the Daughters have advanced degrees, and the order already runs its own 403(b) plan for the nuns themselves, according to the news report.   

The Boston Archdiocese is also facing a clergy pension system that it warns will run out of money in 2011 (see Archdiocese of Boston Takes First Step to Reducing Pension Deficit). Last December, it announced it will freeze pensions for about 10,000 church secretaries, parochial school teachers and other lay employees and offer them a 403(b) plan (see Boston Archdiocese Moving to 403(b) Plan).

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