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Supreme Court considers churches — ERISA exemptions

Since 1974, the Employee Retirement Income Security Act has protected the retirement funds of people in Tennessee and across the country. By setting minimum standards for the administration of retirement plans in the private sector, ERISA has held fiduciaries accountable for the way they manage the benefits of employees. Church-affiliated pension plans have been exempt from ERISA, but that may soon change.

The question currently before the U.S. Supreme Court is whether entities that are affiliated with a church but are not run by a church are exempt from ERISA rules. Specifically, three hospitals are seeking a reversal of lower court rulings stating the hospitals are not exempt under the religious affiliation exception. Their hospitals are not run by the church, and their pension plans are not the same as the plans of the churches to which they are related. Employees feel that the exemption has allowed the hospitals to seriously underfund their pension plans.

Representatives for the hospital point out that the Internal Revenue Service has granted church status to the hospitals. They add that religious nonprofits have not been held to ERISA rules for 30 years. If the Supreme Court decides in favor of the employees and rules that the hospitals are not included in the church-affiliation exemption, it may mean the hospitals will be subject to billions of dollars in penalties for the underfunding of about one million employees.

While the Supreme Court debates this dispute, many employees worry about the underfunding of their retirement plans. Those in Tennessee who work in other industries in the private sector may have similar concerns about their pensions. A consultation with an attorney who has wide experience and in-depth knowledge of ERISA will provide them with the answers they seek.

Source: www.ai-cio.com, “High Court to Decide if Church-Affiliated Pension Plans Are ERISA Exempt“, Michael Katz, April 4, 2017