Like pretty much every traditional American pension plan, Catholic clergy retirement funds are struggling to deal with the triple punch of an aging work force, lengthening lifespans and lagging investments.
The Archdiocese of St. Paul and Minneapolis, however, has some special complications with its plan, sparked by recent sex abuse scandals and controversy over its handling of continuing “disability payments” to priests.
In some cases, critics say, the abusers end up with larger incomes from the pension fund than priests who retire with unblemished records.
Among the recent revelations: The woefully underfunded priests’ pension plan has been stretched even thinner by the church hierarchy’s decision to classify some priests accused of abuse as disabled and grant them early retirement.
The most notorious of the recent stories centers on Father Robert Kapoun, who sexually assaulted a number of young boys, according to court testimony. The jury in a 1996 lawsuit found against him, delivering a $1 million verdict that was later overturned for technical reasons.
The following year, Kapoun was allowed to retire early and given a supplemental monthly “medical retirement” benefit. His pension tops $1,500 a month — more than many retirees in good standing will get.
The archdiocese has said the pensions are part of the supports necessary to keep the abusers from re-offending. “Every bishop is required by canon law to provide financial support for priests of his diocese,” a spokesman said in response to questions from MinnPost.
“In some cases, it was determined that offenders should be removed from active priestly ministry, be subject to compliance with our monitoring program, and required to undergo therapy and spiritual direction to avoid reoffending,” the response continued. “These decisions were made due to a number of factors, including the projected likelihood that the priest would be not be able to find secular employment or be a candidate for laicization.”
Last spring when it announced it was testing the likely reception of a capital campaign, the Archdiocese of St. Paul and Minneapolis named priests’ pensions as one of the areas where the projected $165 million in new funds would be spent. On Tuesday, the archdiocese said it was delaying a final decision on launching the campaign.
Current and former priests, as well as lay advocates for church reform, say it’s been understood, if not confirmed, for two decades that church leaders have used the pension fund and other church accounts to deal with problem priests.
“We heard repeated stories where the archdiocese would dip into the fund to meet various obligations,” said Bob Beutel, a member of the Catholic Coalition for Church Reform, which has been asking questions about the way the pension is managed for four years. “But it’s never been disclosed what the money is used for.”
Like others, Beutel said he was disturbed that the payments to abusers outlined in recent news stories are larger than those made to most priests who retire with unblemished records: “The extraordinary withdrawal to pay off offending priests is just another abuse of the fiduciary duty the archdiocese has to its priests.”
A controversial and outspoken critic, Father Michael Tegeder is one of several people interviewed who said that pension managers have said in meetings that the fund has half as much funding as it needs to meet its obligations. With about 180 pensioners drawing monthly benefits and a similar number of active but aging priests paying in, the fund risks insolvency, they said.
Tegeder began asking questions about the management of the pension in 1997. Back then, he said, each parish or institution that employed a priest made an annual contribution to the pension fund of about $800 a year. For the last five years, the amount has been $17,500.
As explained by the archdiocese in its response, under church law clergy have the right to income and benefits. Until recent decades, most worked and lived in the church rectory up until they died.
In the late 1960s, diocesan pensions were created. They were minuscule, and because they were exempt from one of the two major federal laws that govern pension plans, bishops had — and still have — an extraordinary amount of discretion to decide things.
According to Amy Monahan, a professor at the University of Minnesota School of Law, the so-called church plans must conform to state law and their administrators must follow the parameters established for each individual plan. And under the U.S. tax code, once a benefit has been given, it cannot be taken away, so the amount of a pension cannot be lowered.
So long as those requirements are met, however, church leaders do have discretion to, say, define “disability.”
The looser regulation has allowed dioceses in other states to manipulate church pensions in ways a corporation or government agency would never be allowed. For 16 years ending in 2002, for example, church leaders in Boston held twice-yearly fundraising campaigns for the pension but used the money for other things. In 2005, after spending $85 million to settle sex abuse claims — $15 million of it borrowed from the pension fund — the Boston archdiocese announced likely cuts to benefits going forward.
In the late 1990s, a number of current and former priests attended every meeting of the board that managed the fund. They complained that many decisions seemed more like rewards and punishments than a system with rules.
Former priest Ed Kohler recalled Tegeder asking repeatedly whether the fund was being tapped to pay benefits to priests who had been involuntarily terminated from their jobs, something the plan did not then specifically authorize. The administrator in charge, he said, would hedge, saying “maybe,” “perhaps” and “it’s possible.”
“I am inclined to believe that money was taken from the trust fund for those who are not eligible,” said Kohler.
In 2003, the plan was revised to allow the payments and to have a uniform system of deciding who got how much. Priests are eligible to retire at 65 with a monthly benefit of $38 for every year of service. An additional $2 per year is paid out for every year of service if the priest waits until he is 70.
Although 70 is widely mentioned as the mandatory minimum age of retirement, Kohler insisted that this is a verbal policy of Archbishop John Nienstedt. “When you are disabled or want to retire, you have to go on your hands and knees,” he said.
How much have the recent headlines affected parishioners’ willingness to donate?
Ed Walsh, a member of the liberal St. Joan of Arc parish, is not troubled by the idea that a priest “who has basically committed their life to the work” might qualify for disability based on a psychological disorder — “if they have a normal payment.”
His objection is to a clerical culture that he says is so strong it clouds the judgment of good people. The inclusion of the voices of laity and particularly of women, he said, would be an effective counterbalance, a view he shares with Beutel.
By contrast, Bob Walz is so engaged with Guardian Angels Catholic Church in Oakdale that he drives 50 miles every week from his home in North Branch to attend services. He will not, however, give the parish a dime, in part because of the way the church has dealt with clergy sex abuse.
“We contribute to the cemetery fund, to the homeless shelter, to many good works, but not to anything the archdiocese will benefit from,” said Walz, who last year retired from a lay position at the church he held for eight years. “I’m very frustrated with the state of the Catholic Church right now.”