Pension plans in the District of Columbia and around the country have to be funded in order to fulfill their purpose. However, the Archdiocese of Newark, New Jersey, failed to do so, according to a lawsuit filed by more than 100 former employees of Saint James Hospital. As a result of the Archdiocese's action, the plan ran out of funds in 2017, and no benefits have been paid out since.
The pension plan operated under the Employee Retirement Income Security Act (ERISA) until the Archdiocese stopped funding it in 1988. Around 1997, the Archdiocese had more than $20 million in excess funds that it could have used to plug a $2.7 million hole in the plan. However, the Archdiocese chose instead to transfer those funds to a non-guaranteed Transamerica account. Transamerica later notified the employees that the Archdiocese had stopped contributing to the plan and that funds were no longer sufficient to meet future obligations.
When the Archdiocese stopped funding the plan in 1988, it notified the employees of its intent to terminate the fund. However, that action was not approved by the Pension Benefit Guaranty Corporation (PBGC) because of the plan's inability to cover benefits. To escape PBGC's scrutiny, the Archdiocese later asked the IRS to deem the plan a 'church plan", which would exempt it from certain ERISA requirements. However, the Archdiocese concealed this action from the employees, according to the lawsuit.
The hospital employees contend that they were promised guaranteed benefits for life and that the Archdiocese violated the law when it skirted regulatory agency rules to avoid its obligations. If the employees are able to prevail, they may be able to have their benefits restored. However, such issues are quite complicated, and having the services of an attorney with experience in ERISA benefits claims litigation might be advisable.