The retirement savings of more than 80 non-clergy employees of the Diocese of South Carolina and its parishes are being held hostage by their former pension plan at the Episcopal Church (TEC).
The lay employees have been trying to arrange for the rollover of their retirement savings since February, when they first contacted the Church Pension Group, which provides retirement, health and other benefits to employees of The Episcopal Church, its parishes, dioceses and other institutions. The employees became eligible to rollover their funds into another qualified plan when their employer, the Diocese or the parishes that voted to disassociate from the denomination, officially ceased to be employed by any TEC organization or parish.
I may be wrong here, but it appears to me that if this is true, it may constitute a violation of Federal law, since the last I heard, it is unlawful to either tamper with, withhold funds, or interfere [b]in any way[/b] with a person’s pension plan.
Apparently illegal – I guess that would be for a court to decide. Clearly immoral and shameful. But, would anyone expect 815 to handle this fairly? Perhaps some sympathetic lawyers might, pro bono, start writing some letters to the Pension Group.
I know individuals are entitled to transfer 401(k) and similar retirement savings funds once they leave the sponsoring employer. I don’t know the law about “cash balance” pension funds, but if the Diocese’s lawyers say these should be transferrable, then presumably they are. If that is the case there is little excuse for this delay. Surely the funds on deposit for SC lay employees cannot be enough the sink ECUSA’s church pension fund if withdrawn. (And if they are, then that’s another problem entirely!)
Did this happen to any others that dissafilliated or is this punitively aimed at the Diocese of SC?
A very intriguing question indeed! And if it’s true, then what?
30 pieces of silver were sufficient previously, but litigation IS EXPENSIVE after all………….
Those accounts must be rolled over when a former employee makes the request. Held hostage? The only other explanation would be gross incompetence. Neither is exactly what you want out of your plan administrator.
Perhaps it’s becoming clear that large, wealthy congregations leaving also remove a significant piece of the retirement “pie.” Chickens, roost, coming home, etc., etc.
There are two programs in the Church Pension Lay Employee Pension Plan. One is a tax-deferred defined contribution plan under the provisions of IRS section 403b. The other is a defined benefit plan parallel to the Clergy Plan. I can see no rationale for Pension to restrict roll-over of the 403B accounts. If that’s what’s happening, I’d call a lawyer. However, if these employees were in the Defined Benefit Plan, then there is no balance to “roll over.” The will simply cease to earn additional benefits. But the certainly must receive all the benefits earned once they are eligible to receive them under the terms of the plan agreement.
Thanks for the clarification, Bruce. I myself was wondering if lay beneficiaries were treated like clergy; apparently some are and some aren’t. Either way the response of the Fund’s bureaucrats seems odd (to put it politely).
These are the contributions of lay employees in the Diocese of South Carolina and as such they should be fully transferable to any appropriate retirement account. I wonder if individuals could retain a lawyer to write a rather nicely but firmly worded letter on their behalf to transfer the funds. One would think that the possibility of violating the federal ERISA law would make TEC think twice about this maneuver…. then again…. this is TECUSA. Why do they do such acts??
The difference between a defined contribution plan and a defined benefit plan in terms of portability is one of the reasons most lay employees choose the defined contribution plan. In any event, the plan materials provided to each participant are exceptionally clear on the question. Each employer–parish, diocese, other qualifying institution–will elect the plan chosen by its eligible lay employees. It is simply not possible to make a withdrawal of funds from a defined benefit plan, since there are no individual accounts. It’s a contract for a future benefit.
Bruce Robison
Since the lay people formerly associated with TEC are asking for the funds to be rolled over, one might be justified in assuming this is the defined contribution plan. BMR+ is correct in saying that a defined benefit plan, once vested, will be paid to the employee at the appropriate age and is not subject to rollover. These must, therefore, be of the other variety, and if so, arrangements to make the transfers should be made promptly.
I would agree that if CPF is preventing SC lay employees from exercising their contractual rights to control 403b accounts in the defined contribution plan, then legal action should be taken immediately. But I would just say I’ve done a great deal of work with Pension staff over the years, and I find it hard to believe. It is, honestly, more believable to me that some employees misunderstood their defined contribution plan. But I’m sure the facts will soon be clear one way or the other.
Bruce Robison
I’m sorry. I meant that the employees may have misunderstood the defined benefit plan.
BruceR
I don’t know Bruce. Here is more from the actual article at the diocesan website. This seems pretty straightforward. I seriously doubt that the pension administrator could be so clueless as to not know the type of accounts.
[blockquote]In mid-March, the Diocese’s pension administrator Nancy Armstrong began correspondence with TEC’s Church Pension Group administrator to notify it that several Diocese employees would soon begin the rollover process. After numerous emails back and forth, Frederick Beaver, a senior vice president with the Church Pension Group, informed Armstrong that protecting TEC’s pension plans is “paramount†and said he would contact her when he has “definitive legal responses.†For more than six weeks, the Pension Group has not responded to communication on the issue and has not provided the promised legal response.
“TEC is in non compliance with the Department of Labor and the Internal Revenue Service requirements, said Jim Lewis, Canon to Bishop Mark Lawrence. “These 403B contributions are being incorrectly held.†Lewis explained that the Diocese’s parish employees are legally eligible to move their pension savings to other authorized funds, such as the plan established by the Diocese after it disassociated from the Episcopal Church. These are individuals’ funds and there is no legal reason to prohibit people who no longer work for any group within the denomination to roll over their retirement savings.â€[/blockquote]
I agree that if the Lay Employees are no longer employed by an Episcopal Church institution eligible to participate in the 403b Defined Contribution program of the Church Pension Fund Lay Employee Pension Plan, there is no reason the employee shouldn’t be able to roll-over the balance. The Plan FAQ says: “Withdrawals from the Plan are permitted when you have a distributable event. These events include termination of employment, retirement, attaining age 591â„2, becoming disabled, financial hardship, or death. The taxable portion of your withdrawal that is eligible for rollover into an individual retirement account (IRA) or another employer’s retirement plan is subject to 20% mandatory federal income tax withholding, unless it is directly rolled over to an IRA or another employer plan.”
The Defined Benefit Program is a different kettle of fish, of course, as there is no individual ” account balance” to roll over.
Bruce Robison
Note Pension’s statement:
https://www.cpg.org/global/about-us/press/response-to/
Bruce Robison
Question:
Are there any “Matching Contributions” involved?
That could possibly be a hold up in that the CPG must
determine exactly how much of the matching funds are
eligible for withdrawal.
When the company I worked for ceased to exist, I was able to rollover the contributions I had made, but the
matching funds for the only year I was got them, were
held up for over a year. Fidelity was the company managing the 401K program and I guess the wanted to make sure all the i’s were dotted and t’s crossed before disbursing the final amounts. Eventually I got a check for an additional hundred and some odd dollars.