In a letter dated February 24, 2012 to all Saint Peter’s University Hospital Retirement Plan participants, Ronald C. Rak, the hospital’s President and CEO states that a “a review undertaken by our outside pension consultants and attorneys has made clear that Saint Peter’s pension plan has never been – and is not currently – an ERISA plan, and that since its inception, the plan has always been – and is currently – a church plan.”
In fact, Saint Peter’s University Hospital Retirement Plan has been an ERISA plan since 1974.
In 1974, as a result of the enactment of the federal private pension law, the Employee Retirement Income Security Act of 1974 (ERISA), Saint Peter’s University Hospital Retirement Plan became an “ERISA plan.”
This is because all private retirement plans, with one permanent exception, were covered by ERISA. The one permanent exception was for plans established and maintained by churches for the churches’ own employees. In 1980 Congress made permanent a temporary exemption for plans established and maintained by churches for the churches’ own employees which also included the employees of church-affiliated organizations. This exemption also provided that plans maintained by “church pension boards” are also exempt from the law.
Since the Saint Peter’s plan was not established and maintained by a church, it does not fall within either the permanent or temporary exemption. Since 1974 it has been an ERISA plan.
As an ERISA plan, the Saint Peter’s plan is required to comply with federal standards for providing benefits and disclosure to participants. The hospital is required to fund the plan and to pay premiums to the federal pension insurance program, the Pension Benefit Guaranty Corporation (PBGC). The payment of premiums is necessary to ensure that the pension plan and participants’ pensions are insured in case the plan terminates without enough money to pay promised benefits.
The Saint Peter’s plan was not established by, and has never been maintained by, a church. In other words, the Saint Peter’s plan has never come within the “church plan exemption.” Since 1974, it has always been an ERISA plan. This is why the Saint Peter’s plan has always paid PBGC premiums and has always informed its participants and employees the pension plan was an ERISA plan.
From 1974 until 2006, Saint Peter’s University Hospital fully complied with ERISA, the federal private pension law. The plan was funded in accordance with the law, and the plan paid pension insurance premiums to the PBGC. In addition, the plan’s own documents stated that the plan is an ERISA plan.
In 2006 the plan stopped complying with the funding requirements on the advice of consultants. It, however, continued to pay PBGC premiums. (It is important to note that the PBGC only accepts premiums from ERISA plans.)
Finally, former Saint Peter’s President and CEO John Matuska, who served on the hospital’s Retirement Committee from 1977 to 2004, in a letter to the IRS written on December 30, 2011 writes that “the plan has never been nor was ever considered to be a church plan”
Read responses to specific statements made in Ronald Rak’s letter and accompanying Q&As.< Back