Pension Consternation

Was everyone excited to have endured heard the launch of the Catholic Appeal this past weekend? Did your parish announce their individual goal publicly?  Naturally, each parish has a goal, but the overall goal for Jack Connors’ crack fund-raising team is nowhere to be heard, so nobody knows if they succeeded or failed. That is part of the “accountability” and integrity of the Archdiocese of Boston in fundraising.

Speaking of accountability and integrity, an alert reader commented on our last post that the biggest fundraiser of his tenure Cardinal O’Malley kicks off this week is not actually the Catholic Appeal–rather it is the “attempt to  intimidate thousands of former employees out of their pension money.”  We will have a lot more to say about this topic, but will cover a few points today.

First, BCI wonders how many people are aware that this is not the first time that Cardinal O’Malley and the Archdiocese of Boston have reduced the employee pension plan benefits.  A few years back, they cut out the cost of living allowance (COLA).  So, this is actually the second cut to pension benefits.

Second, with the new round of communication that the Chancellor and his minions are undertaking and all of the memos and PR flying around about the pension plan cuts, the average person would probably assume that the RCAB has done extensive research about how other dioceses are handling their pension obligations. Just like one would reasonably expect for employee compensation, one would also expect they have spoken to other large archdioceses like New York, Chicago, Los Angeles, and presumably ones in the northeast, like Worcester, Hartford, Fall River, Philadelphia, and maybe the likes of Cincinnati or Detroit.   Not necessarily. Sources tell BCI that when someone working for the Boston archdiocese in employee and retirement benefits in recent years took the initiative to speak to some other dioceses to ask about their plans, they were told by one of the powers-that-be (which means Chancellor McDonough or Carol Gustavson) to basically cease and desist.  Maybe work had already been recently done, and they were just saving the duplicate effort. We know in years past, before the current regime, the financial management of this diocese surveyed other dioceses on such matters.  But sources tell BCI that in recent years there had not been any kind of competitive study done for either benefits or compensation programs. Of course, we already knew that no one at 66 Brooks Drive or on the Finance Council cares about making sure compensation in this archdiocese is comparable to other dioceses.  Why should they?  They can pay a retired multi-millionare banker $1.25M over five years and pay a retired lawyer and retired school administrator nearly$1M each over 3 years, while claiming they didn’t have the cash to fund pension plans, and everyone basically lets them get away with the breaches of fiduciary responsibility and trust. 

Tip for the day: Try writing to Carol Gustavson today (, and ask her to email a competitive assessment report performed no later than 2010 of the pension/retirement benefits in other dioceses.  Let us know what you hear back.

Lastly, former employees of the diocese who paid into in this pension plan need to understand that a lump-sum payment is not a good idea except in certain circumstances.  Re-read the Boston Globe article from December 12, “Archdiocese to end lay pension plan

Those workers can choose to receive their benefits in a single lump sum, or to begin receiving annuities while they continue to work. But the early payments would be reduced to reflect the plan’s unfunded liability and, in the case of the annuities, to reflect the younger age at which the employee receives payments.

If, for example, an employee who has earned $30,000 in benefits chooses the lump-sum option and cashes out and the plan has been 80 percent funded, on average, during the previous year, she would receive $24,000.

The more employees take advantage of these opportunities, the faster and cheaper it will be for the church to reduce its risk and eventually end its obligations under the plan. But pension experts say both deals are poor ones for employees, unless they have a terminal illness, because it guarantees that they will receive a smaller amount of money than they have earned.

“It’s really ugly, trying to get people to make bad financial decisions to save the Catholic Church some funding,’’ said Norman P. Stein, an authority on pension law and a professor at the Earle Mack School of Law at Drexel University.

He said corporations, unlike religious organizations, are prevented by law from discounting lump-sum payments to reflect a pension fund’s underfunded status. He said the payouts can be tempting, particularly for the unemployed, but financially unwise. “People sometimes have a hard time looking very far into the future.’’

By the archdicoese coercing you into taking a lump-sum now, they are reducing their obligation to pay the pensions to lower-paid past employees, so when the plan becomes fully funded again in a few years, they can take that full-funding and offer full benefits under the new plan to the likes of Jim McDonough, Beirne Lovely, Kathleen Driscoll, Mary Grassa O’Neill, John Straub, and everyone else making $200K+ a year. A better solution would be to uphold prior commitments made by ensuring the plan is fully-funded for those people who worked for years at low salaries in service to the church and were already vested–and then reduce benefits on a going-forward basis to current employees who are not yet reliant on those pension funds.

It increasingly appears there is no plan for a much-needed changing-of-the-guard in the financial management of the archdiocese, so the wasteful spending of donor money and rule by Archbishops Connors, McDonough, and Kaneb will continue.  More and more, BCI is becoming convinced that it will take an uprising of lay Catholics and priests–and perhaps even the threat of lawsuits–to stop this fast-moving train before more harm is done. Lay-people telling pastors they are not giving to the Catholic Appeal and pastors telling the archdicoese they will not support the Appeal is the first step.

What do you think?

13 Responses to Pension Consternation

  1. Objective Observer says:

    In England, technical information like writing to the competent regulators to request permission to underfund pensions must be done in “plain English.” They even give an award called the Crystal Prize for crystal-clear writing on things like bank regulations, contracts, tax form instructions and warranties. They give a “mud in the eye” prize to those who insist upon obfuscating the text with purely legal language, spewed at great length, when plain English could have done the job.

    Among the hundreds of people who received the mailing from the Benefits Trust of RCAB asking the attorney general (yes, Martha) to ease RCAB out of its written pension commitment to employees, not one could have read it and told you what your options were to object. It made the most obscure sections of the Code of Canon Law read like the back of a cereal box.

    Why the tangled gobbledygook, Ms. Gustafson? Why not plain English, with a bullet list of options for beneficiaries to act upon in order to object, and clear instructions on how to do so?

    Back in the 1970s, when I was talking to a friend about going to confession, and not liking the little chat rooms that were replacing confessionals and anonymity, he recommended that I go to Arch Street and find the confessional with the placard that read “Lithuanian,” then go into the confessional and talk as fast as I could.

    The letter sent out by the Benefits Trust notifying beneficiaries of the petition to alter their plan (and not to their benefit) might as well have been written in Lithuanian shorthand.

    Kind of makes the title “Benefits Trust” ironic, doesn’t it?

  2. Former Employee says:

    Has any research been done on how Catholic Charities extricated itself from the Pension plan, converting to a 403b? They did it several years ago and (I believe) it was part of the Archdiocesan Pension plan.

    They have a decent one now – a match and core contribution, which is pretty good for this day and age and they certainly aren’t rolling in money.

    • Another former employee says:

      Catholic Charities did freeze its participation in the Archdiocese’s defined benefit plan several years ago but the 403(b) that was set up was outside of the Trust. As part of the freeze agreement Catholic Charities had to agree to fund up the benefits that were promised to its employees in the defined benefit plan. As a result it is my understanding that Catholic Charities employees did not recevie the letter offering them a reduced lump sum benefit.

  3. Elizabeth Anne says:

    I was told by the archdiocese that since my pension was valued at less than $5,000 they could legally force me to take the payout. Combine that with the fact that they told me they were getting rid of the pension plan entirely, and I just took the small amount.

    Do you know what the woman at the archdiocese said to me? She said I could go out and do some Christmas shopping with the money. Seriously? It’s my retirement.

    • Former Employee says:

      Mine is somewhere around the same, but they never did that to me. I got a letter about four months ago and nothing else since.

      I sounds like you were lied to….what is Hell going to do when it fills up with people from the Chancery Offices, they’ll have to keep the murderers out for lack of room.

  4. anonymous says:

    It’s time for the TRUSTEES of the plan to be held accountable for their negligence and their shirking of their financial responsibility. I would urge all those that received pension letters to stand up for your rights and not to allow this travesty to take place.

    To accept a discounted lump sum is foolish for most of the retirees.

    The appeal has just started and I would urge everyone to make this offer piublic so that people can see the folly in contributing to this organization.

  5. Susan says:

    Have to say I and my 92yr old buddy have not given to the appeal. My money is given to those churches that support the Latin Mass. Have to make wise decisions as to where my money goes.

  6. Quality Guy says:

    If our Public protector [ the Honorable Martha ] is going to town on BS/BS since it is a ‘public charity’ is there any chance that she and her staff ight go after RCAB for its [IMHO ] outrageous pay policies ??

    I’m not sure if RCAB is a ‘charity’ afterall, sicne the legal definition if I rememebr correctly is ” A corpoartion Sole…’ and is the only one in the Commonwealth.

    any informed specualtion willbe welcomed .

    • Objective Observer says:

      Martha resides snugly in Jack Connors’ pocket — so don’t hold your breath.

  7. Quality Guy says:

    I just looked at my posting of a minute ago, and was appalled at my typos !!
    Mea culpa ! but I couldn’t take typing at Matignon back those many years ago since that course was for ‘girls only’ .
    you would help me [ and others ] out if you could add a spell check feature to the blog.

  8. John Russo says:

    I really do not understand what the problem is. The Lump Sum option is just that an option. If you do not want to take the lump sum option you can still take your pension on a monthly basis. That is still an option. I am looking forward to taking the lump sum and reinvesting it so I can get a good return, but that is my choice.

    • Anonymous says:

      What you don’t understand is that the Archdiocese has refused to honor their promises and obligations to fully fund the pension plan. Under the guise of a lump sum, they are trying to buy off former employees by offering the lump sum at a deeply discounted amount. If they were honest, they would offer a lump sum amount calculated at a fully funded level only discounted for age.

  9. anonymous says:

    The attorney for the Pension Fund can be reached at:

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