WASHINGTON, DC—Employees and retirees of St. Peter’s Hospital were disappointed to find out their pension plan had been approved for a change by the Internal Revenue Service (IRS) on August 22.

Because of the hospital’s affiliation with the Catholic Church, the IRS ruled that they are not subject the requirements of the Employee Retirement Income Security Act (ERISA).  Instead, the pensions now qualify for “church plan” status.

In November 2011, employees and retirees of St. Peter’s received a letter saying that they were officially put on notice that St. Peter’s was looking for approval for their “church plan” status.

Nancy Hwa, communication director for the Pension Rights Center, was approached by former employees of St. Peter’s Healthcare System, concerned about the future of their pensions.

People like Sue Fritz, a nurse who worked at St. Peter’s University Hospital for two decades, and Larry Kaplan, a retiree who managed the nutrition services at SPUH, told newspapers that they were worried that the changes made to these plans will affect their pension funding.

The ‘church plan’ has many people worried because they will not receive mandated funding protection under the federal pension law, Employee Income Security Act (ERISA), and insured for solvency by the Pension Benefit Guaranty Corp. (PBGC), according a report in the Home News Tribune.

According to a report at pscua.org, one of the safeguards required by the ERISA is that companies pay insurance premiums on employee pensions – insuring that the money will be there.

According to Phil Hartman, director of public relations at St. Peter’s Healthcare System, the company has been operating as a church plan since 2006.  However, it has voluntarily followed all but one of the ERISA guidelines, according to the Home News.

“The only thing that St. Peter’s has done that does not fall into the guidelines of the ERISA is that they spread out pension obligation payments into annual installments rather than making ERISA-mandated lump-sum payments that cover multiple years in one stretch” said Hartman.

The reason Hartman says the reason for the change “is that it allows us to spread out funding in payment installments rather than paying in one lump sum every several years… It gives us a lot more flexibility.”