Boston Pension Crisis

Parish Diary

Fr. Peter Daly

June 8, 2005

 

            Another crisis is brewing in the Archdiocese of Boston. This time the scandal is financial. Just like the child abuse scandal, it has implications for the wider Church.

            The narrow issue in Boston is the priests’ pension fund.

            On May 12, 2005, the New York Times reported that the Boston priests’ pension fund was up to $70 million short of the money it needed to meet its current pension obligations.

            Boston’s retired priests are now being asked to take cuts in their retirement benefits. A committee of clergy is studying the matter to make recommendations to Archbishop Sean O’Malley.

            Evidently there were no contributions at all made to the pension fund from 1986 to 2002 (under the tenure of Cardinal Bernard Law), despite the fact that collections averaging $4.5 million per year were taken up each Christmas and Easter for the “Clergy Benefit Trust.”

            Why didn’t that money go into the pension fund?

            Those were the stock market boom years. Actuaries, lulled into a false sense of security by the “paper value” of investments, thought that the money wasn’t needed.  (George Bush, take note for Social Security.)

            So the Archdiocese spent the money on “special” needs for active and retired priests not covered by insurance, such as treatment for alcohol and psychiatric disorders and funeral expenses.

            The Archdiocese claims that this was a legitimate purpose of the Trust. But many people disagree. The Boston Globe reports that people in Boston, including many priests, say that they were told at the time that the money was going for exclusively for pensions.   

            Late in May a group of Boston parishioners filed a complaint of “public fraud” with Massachusetts Attorney General Tom Reilly. In a statement, the attorney general’s office said it is “reviewing the facts.”

            The Archdiocesan Chancellor David Smith says, "The Archdiocese takes up special collections for many purposes including support for our clergy. Each one of those collections is remitted exactly as we represent it will be. Both the Archdiocese of Boston and the clergy funds are audited on an annual basis and at no time have any of the audit firms raised any questions whatsoever about our handling of these funds.”

            So far, however, the Archdiocese has declined to make those audits public according to the Boston Globe.

            The courts will have to sort out the details. But the Boston crisis raises questions for the whole church about pension plans for diocesan priests.  

            Across the U.S. there are roughly 29,000 diocesan priests. Most of us are fast approaching retirement. Our median age is nearly 60.  

            We want to know who manages our pension funds.  To whom are these managers accountable? What public reporting is made to priests and laity, if any?

            What limits the ability of bishops to borrow from these pension funds or use them for other purposes? What happens if they do?

            How are these funds protected from law suits or loss if the diocese declares the bankruptcy? (Three dioceses declared bankruptcy this past year.)

            The pension funds of non-profit groups like churches are not subject to Federal regulation. Maybe they should be.

            It might surprise people to know that most priests have no legal rights to their pension funds. People only have a right to their pensions when they are “vested” after a certain period of time. About a third of U.S. dioceses have “vested” pension plans. Most, like Boston, never vest.

            In my view it is time for a national, independently administered pension fund for all diocesan priests. It should be a vested pension plan that would give priests legal rights.

            Perhaps we should take a leaf from our health care play book. The church does not run its own health insurance. We subscribe to Blue Cross and Blue Shield or some other insurer. Maybe we should join a national pension plan like TIAA-CREF.

            It would help us avoid disasters like Boston pension fiasco.