Mirror of Justice

A blog dedicated to the development of Catholic legal theory.
Affiliated with the Program on Church, State & Society at Notre Dame Law School.

Thursday, January 7, 2010

ERISA Exemption of Church Plans

It was reported earlier this week that Augsburg Fortress, the publishing ministry of the Evangelical Lutheran Church in America (ELCA), has terminated its defined benefit pension plan. The plan is severely underfunded, meaning that plan participants will only receive a fraction of the benefits to which they are entitled under the plan.

ERISA regulates the pension plans of most private employers.  Among other things, it imposes mimimum funding standards on defined benefit plans designed to prevent serious underfunding problems.  ERISA also put in place an insurance system that guarantees some portion of plan benefits in the event a plan terminates with insufficient assets to pay all vested benefits that have accrued under the plan.  Because ERISA contains an exemption for "church plans," the regulations and protections of ERISA don't apply to the Augsburg Fortress plan.

Although I confess that I have not ever given the church plan exemption a whole lot of thought, I think it is probably correct that such plans should be exempt from ERISA regulations.  (Whether that conclusion is better grounded in Establishment Clause or Free Exercise concerns is something I'll leave to the First Amendment scholars.)  But the exemption does contribute to some unfortunate consequences.  Employees of entities such as Augsburg Fortress are in need of as much protection as employees of private employers and the exemption leaves such employees far worse off when a plan such as this one is terminated. 


Stabile, Susan | Permalink

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