Boston Archdiocese Sued Over Pension Plan

As most readers know by now, just about the only way to get the Archdiocese of Boston to take action these days on anything is some sort of big threat or pressure.  These threats and pressures can take one of 3 forms: a) bad publicity, b) loss of money, or c) a lawsuit.  Today we talk about a lawsuit recently filed which many people might want to know about.

The cuts to the employee pension plan announced last fall that affect current and former diocesan employees as well as employees at affiliated organizations are getting a lot of attention of late.  Many dedicated former employees feel the communications from the archdiocese are intended to coerce them into accepting a lump-sum payment because of the uncertainty of the future funding status of the plan. We have copies of the letter we will post soon and agree it seems like coercion.

As part of our research to help readers prepare for the upcoming information sessions–including one Thursday night at the Pastoral Center in Braintree–the other day we were reading some of the information at the archdiocese’s glitzy benefits website, when we happened upon the pension plan financial statements from 2010 and 2009.

Check out this link to download the RCAB Pension Plan Audited FY 2010 Financials.  It was amended and released in mid-January 2011 with little public attention. Go to Page 13, note J for information about one entity whose funds have been managed by the RCAB that has filed a legal complaint to get their funds out.  Here is what it says:

The Plan Trustees have voted to amend the Plan to implement a soft freeze effective December 31, 2010, and a hard freeze effective December 31, 2011. Under the provision ofthe amendment, any employee hired after December 1,2010, will not be eligible to become a participant in the Plan. As of December 31, 2011, all participants will stop accruing benefits. Employees with five or more years of service will remain vested. Employees with at least one year of service as of December 31, 2011, will be allowed to continue to add years of service towards vesting after the freeze date.

During December 2010, a Complaint for Equitable Relief and an Accounting was brought against the Plan’s Trustees by the Daughters of St. Paul, a participating entity in the Plan. The entity is seeking a transfer of the assets and liabilities allocable to it relative to its current and former employees who have been participants in the Plan. Prior to agreement to the transfer of assets and assumption of liabilities by a new plan to be created by the participating entity, the Trustees of the Plan have sought assurances from the participating entity that will provide sufficient protection of pension plan benefits to the respective participants. It is the Trustees’ estimate that the nature of the legal action, which primarily seeks equitable action as opposed to monetary damages, will not materially and adversely impact the Plan. The Trustees hope to engage in discussions promptly to try to reach closure regarding the transfer of the pension plan assets of the Trust to the Daughters of St. Paul, on conditions, at a value, and with accounting and actuarial information satisfactory to both parties.

We did not let the Daughters of St. Paul know we learned about this lawsuit or seek permission from them or anyone to share news of this legal action since this published information is sitting right out there in the public domain.  Sources indicate to us that the Daughters tried to solve this problem by meeting with various archdiocesan officials, but the archdiocese was uncooperative and confrontational in the negotiations.

We cannot blame them for taking legal action. Very big of the archdiocese to respond back saying they want assurances from the Daughters that they will provide sufficient protection of pension plan benefits to their participants, when the archdiocese itself makes no assurances to its own participants they will provide sufficient protection of benefits. The Daughters run their own publishing business, they operate a chain of retail bookstores, they have their own recording studio, and more. They have never struck BCI as not being business-savvy, so BCI has little doubt they will be able to work out appropriate investments to ensure benefits are protected for their current and former employees.

Still, Jim McDonough, Carol Gustavson and the archdiocese should really be ashamed that people have to resort to lawsuits in order to protect themselves.

Speaking of being ashamed, it seems to BCI that the anonymous Trustees of the pension plan and Cardinal O’Malley must also be ashamed of the pension plan.  Why do we say that?  Because all kinds of documents list the “Trustees of the Roman Catholic Archdiocese of Boston Pension Plan and Trust” but the names are never listed and they never actually sign anything.

For example, here is the 67-page document outlining all of the terms of the 2011 RCAB Pension Plan and Trust. Go to p.64 in the .pdf (numbered page 59) and look at the approval/signature page.  Even easier, just click on the graphic below.

No names of the trustees.  No signature by a single trustee.  No signature by the Cardinal.  Did the Trustees meet, review, and approve this?  If so, why no signatures?  Did Cardinal O’Malley read and approve this?  If so, why no signature, date, and notarized seal of a witness?  One must reasonably ask the question if this is even a legally valid and binding document.

In case people want to know, here are the names of the anonymous trustees.

Chair: Seán P. Cardinal O’Malley, OFM Cap.,
Very Rev. Richard M Erikson
Mr. James P. McDonough
Very Rev. Joseph K. Raeke
Mr. Robert Guyon
Mr. Mark Rich
Joseph Maher, Esq.
Mr. David Woonton
Paul Sandman, Esq.
Ms. Jane Walsh
Mr. Jonathan Mellin
Plan Administrator: Carol Gustavson
Attorney for the Trust: Linda Sherman, Esq.
Consultants: Chris Green and Brenda Butler, Towers Watson; Tom Sablak, October Three

None of them apparently is sufficiently proud of the plan and their handiwork to sign their names to a single memo or plan document.  Thanks, guys.

Let us know what you think about the lawsuit and practice of never listing the names of the trustees who are supposed to be protecting the best interests of plan beneficiaries.

And stay tuned tomorrow morning (Thursday) for a list of questions to ask at Thursday night’s meeting in Braintree.

14 Responses to Boston Archdiocese Sued Over Pension Plan

  1. Carolyn says:

    BCI, thanks so much for this solution! You’ve solved two problems for me:

    What to do with the money I would have given to the Appeal in 2011 (if RCAB had demonstrated some improved stewardship through reducing the very high salaries of the 25 or so lucky six-figure types) + How to put myself on the side of the Angels in this shabby pension saga.

    I am going to send a significant cash donation (and I mean greenbacks) to the Daughters of Saint Paul, 50 Saint Paul Avenue, Boston 02130, restricted to assisting them with their legal expenses. They used to have a wonderful lawyer who donated his services to them… I hope they still do. Even if the lawyer is not charging them, they would still sustain filing fees and other costs running into the thousands.

    How pitiful that it has come to this. These are humble, smart, wonderful women, but they are not doormats.

    Bet you a bundle that the Globe doesn’t even whisper about this… Morrissey Boulevard cannot afford to wrinkle Jack Connors’ nose!

    McDonough and Gustavson need to resign for their lack of transparency, clarity and diligence. And Joe Maher should think about all the teachers his daughters had all those years whose pensions he’s voting to gut… how does it work that he’s on the board of a Catholic High School, AND has a voting role in deciding Catholic school teacher pension cuts? In his business, I’d say that’s a serious conflict of interest.

  2. Anonymous says:

    Time for the former employees of the archdiocese to also sue.


  3. Susan says:

    legally I do not think the document is legal. That is just my opion.

  4. Fr B says:

    Many priests too have been bullied into submission and or silence because they could not afford legal representation. However, I am not ‘sour grapes’ I am very happy that RCAB bully tactics will not force the Daughters of St Paul to say ‘Uncle’.

    It is long over-due that the bully-approach be called for what it is!!!

    Congratulations BCI + Carolyn God bless your financial support for the legaol defense of the Daughters’ legal persuit.

    I am so happy to finally see the wake-up call for the RCAB and its unmitigated hubris!

    • Objective Observer says:

      THERE IS A LARGER ISSUE HERE. Sorry for the caps, but they’re called for.

      The primary reason given for slashing the retirements, and the reason most often cited to bully people into accepting lump sums is the “economic conditions of the past two years.” This week is the two-year anniversary of the bottoming out of the stock market, the place where the pension fund invests you retirement dollars. Lots of pension funds moved toward a much higher proportion of cash throughout the fall of 2008 as they saw the market tanking. What did RCAB do?

      More importantly, virtually every well-managed fund in the U.S. began buying back like crazy in April 2009. The stock market has gone up 115% in the two years since. So why is RCAB saying their fund went down over the same period? Ordinary investors have gained at least 50% on shares bought in 2009, and anyone who just plain held on is about where they were before the slide.

      What did McDonough do to have what he says is the opposite result? Who did he have managing the money? Why could someone throwing a dart at a list of stocks done 50% better?

      Who picks the investments? If they are investment managers, it must be somebody’s brother-in-law, because the average Joe or Jane has done very well the past two years in the market.

      What’s really going on?

  5. […] Boston Archdiocese Sued Over Pension Plan – Boston Catholic Insider […]

  6. Angry Priest says:

    Bravo to objective observer. I have had some modest investments in the Market. It has gone up and down for years. However, the Market has rebounded and I am doing very well. I asked the same question concerning the Clegy Benefit trust, which I am told is pretty much gone, the answer is always the Stock Market. How come my investments are not gone? Conclusion, very poor management and or misappropriated funds. Take your pick. Priests need to stand up and revolt against very disingenuous leadership. Something is very wrong.
    Also, perhaps the AG while investigating the high salaries of nonprofits ought to include RCAB, also a nonprofit squandering it’s money. One third of the 15mil. Catholic Appeal is spent on these enormous salaries.
    Thanks to BCI for your continued good work.

  7. current employee says:

    What meeting in Braintree??????????? No one at my school has heard of any meeting regarding our pensions.

    • Another former employee says:

      The mmetings being held tonight and Saturday are for former employees vesteed in the pension plan not current employees but I don’t see why you could not attend.

  8. Boston Blackey says:

    My wife is a retired employee, Daughters of St Paul, and she has not been notified of any meetings

    • Another former employee says:

      I guess I should have made that clearer. Former employees who are vested in the plan but not already retired received packages about taking a lump sum pension. The package included a list of meeting dates to find out more information or ask questions.

  9. Gabriel Austin says:

    Was it St. John Chrysostom who said “Never trust a bishop?”

  10. […] on December 20, 2010 and the archdiocese did little to resolve it before word got out. See this post and this court information about the complaint. As we wrote in our March 9 post, citing publicly […]

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