Priests' and Lay Pension Plans (1/21/11)

We learned that JSOnline reported today that the Priests' and Lay Pension Plans in which the archdiocese participates may be underfunded. These plans are multi-employer plans that have hundreds of employers as participants. The archdiocese is just one of the participants. Each year the actuaries for the plans calculate whether enough money is in each Plan to cover the expected lifetime payouts, assuming funds in the plans are prudently invested. If the amount is less than enough to cover expected lifetime expenses, a plan is said to be "underfunded." A determination is then made whether to increase the employers' contributions in future periods to more fully fund the plan. If so, each employer participant must then make additional contributions.

There is no current cause for concern for our employees. Due to poor investment experience in the last few years, many, if not most, defined benefit pension plans across the country are underfunded. As the stock market improved last year, the amount of underfunding was significantly reduced through the investment gains on the plans' portfolios. Underfunding is a problem that defined benefit pension funds across the nation must address in the long term, but does not affect any of our employees in the near term.