US House Bill Would OK Church Plan Trust Investments

>The Church Pension Plan Fairness Act, HR 1533, sponsored by Representative Judy Biggert, (R-Illinois), is designed to allow clergy to invest in collective trusts, according to a Dow Jones report. The trusts allow pension plans to pool their assets in various stock and non-stock interests.

Church plans are now allowed to make all of the same investments that a collective trust would make, but they cannot participate in the trust itself. Since the church plan can’t pool its resources with other pension plans, the same investment would cost more for church-sponsored plans. Church plans must bear all of the transaction costs alone, while members of a collective trust can benefit from economies of scale and are able to spread costs across all of the participants of the trust.

Biggert has said there is “no sound policy reason for our securities laws to exclude church plan participation in specifically tailored pension plan investments.”

Some collective trusts invest in real estate or private investment opportunities and represent a way for large pension plans to diversify their investments and share the risk and costs.

Brookly McLaughlin, a spokeswoman for the House Committee on Financial Services, said the proposal isn’t viewed as controversial. The measure will be brought before the House as a part of a package of bills that typically pass by voice vote.