The Internal Revenue Service is drafting guidance that could require employers with religious affiliations to warn workers when their pensions have lost their federal safety net.
Over the past decade, more than 100 employers, including hospitals, schools, nursing homes, charities and other nonprofits, have converted their pension plans to “church plans,” a largely unregulated category of pensions that generally cover clergy and lay employees of churches and synagogues.
Church plans are exempt from federal pension rules, including those that require employers to fund the plans and insure them with the Pension Benefit Guaranty Corp., or PBGC, a federal agency that pays the benefits if a pension plan runs out of money.
“They said: ‘Hallelujah, I’m a church plan,’ and no longer have to meet funding requirements, or pay premiums, said Andrew Zuckerman, the IRS’s acting director of employee plans, at a meeting for pension groups this year.