By Annysa Johnson
Milwaukee Journal Sentinel
January 21, 2011
http://www.jsonline.com/features/religion/114373669.html
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| The Catholic Archdiocese of Milwaukee, which faces more than a dozen civil fraud lawsuits over its handling of clergy sex abuse cases, filed for Chapter 11 bankruptcy protection in January. As the case proceeds, we'll have updates, analysis, documents and more. |
The Archdiocese of Milwaukee said Friday that its employees' pension plans are underfunded, confirming one of the fears expressed by Catholic Church employees since the archdiocese filed for Chapter 11 bankruptcy protection on Jan. 4.
The revelation came at a meeting Friday of the archdiocese and creditors - including clergy sex abuse victims and pension representatives - with Assistant U.S. Trustee David Asbach.
Archdiocese spokesman Jerry Topczewski said he could not estimate the extent of the shortfall, but that it affects only archdiocese employees and retirees - not those of schools, parishes or other participating employers. He attributed the shortfall to poor investment performance.
"It's not because we haven't made payments. They're made on time and based on actuarial projections," said Topczewski, one of nearly 5,800 people covered in a pension plan for lay employees throughout the diocese.
"You could call all kinds of pension funds around town and find a lot are underfunded," he said. "All investment stocks took a hit in 2008, and we're still trying to recover from that."
The archdiocese filed for Chapter 11 bankruptcy protection earlier this month, saying it is the best way to equitably compensate victims of clergy sex abuse and maintain the essential ministries of the church.
Attorney Daryl Diesing said at the meeting Friday that the archdiocese participates in four retiree plans: three pension funds for lay workers, priests and union workers; and a retired priest's health plan.
Topczewski said the plans are held in trusts and as such are not assets available to fund a settlement - although that could be challenged by attorneys for the creditors.
Victims' attorneys did not return telephone calls and e-mails seeking comment.
Employees concerned
Since the filing, Catholic Church employees have voiced concerns that their pensions could be in jeopardy.
Some pointed to the Diocese of Wilmington, where documents released as part of its bankruptcy revealed a dramatically underfunded pension plan. Also, in Wilmington, the court ruled that millions of dollars in pension funds in a joint investment account would become part of the diocese's estate.
"These employees are victims as well in all of this," said Nancy Hwa of the nonprofit Pension Rights Center in Washington, D.C.
"A lot of them worked for decades for the diocese because they believe in the work it's doing. It just adds even more betrayal to it all."
The Milwaukee Archdiocese's plans are not covered by ERISA, the landmark 1974 Employee Retirement Income Security Act meant to protect workers' pensions.
ERISA imposes contribution and reporting requirements, and participating plans are backed by the Pension Benefit Guaranty Corp. should they fail. But Congress carved out an exemption for religious organizations, Hwa said.
"Very often, employees might not even realize that a plan's not protected, and they may not know the level of funding of the plan.
Topczewski said archdiocese employees receive regular updates on the status of its plans.
Asbach, the assistant U.S. trustee, met privately with creditors on Friday to begin the selection of a creditors committee, which will represent the interests of the archdiocese's largest unsecured creditors. It was not clear Friday whether Asbach had made his selections, and he did not return a telephone call to his office.
The committee will almost certainly include clergy sex abuse victims who have pending lawsuits against the archdiocese - some of whom traveled from across the country to attend Friday's meeting.
Diesing said in the public portion of the meeting that he anticipated six major creditor groups, including the victims and pension plan participants.
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