Skip to comments.ELCA Publisher's Board Terminates Defined Benefit Retirement Plan
Posted on 01/04/2010 7:44:16 PM PST by lightman
ELCA Publisher's Board Terminates Defined Benefit Retirement Plan
CHICAGO (ELCA) -- Augsburg Fortress, the publishing ministry of the Evangelical Lutheran Church in America (ELCA), announced in a Dec. 31, 2009, letter to participants that it will terminate its defined benefit retirement plan effective March 5. The action, approved by the board of trustees of Augsburg Fortress Dec. 18, affects 500 plan participants.
Not affected by the decision is the company's current retirement plan -- a defined contribution plan -- in which Augsburg Fortress' current employees can participate. That plan is a 403b plan "common for non-profit organizations," according to information from the publisher. Approximately 150 current AFP employees are enrolled in this plan.
Most participants in the defined benefit plan will receive a lump sum payment, said Beth A. Lewis, president and chief executive officer, Augsburg Fortress, Minneapolis. The trustees amended the plan to provide for a "more equitable allocation of plan assets among plan participants," she wrote in the letter to plan participants. Without the amendment, more than half of the plan participants would have received nothing at all, Lewis wrote.
"We wanted to make certain that we had the most equitable distribution of assets possible," she said in an interview with the ELCA News Service. "If we had done nothing, the plan would have run out of money in approximately five years and left about 60 percent of those in the plan with no retirement benefits. We didn't think that was equitable or fair."
In 2005 the Augsburg Fortress board of trustees took action to freeze the defined benefit plan, and began offering its 403b plan to its employees. The costly defined benefit plan "has been underfunded for about nine years," Lewis said.
She explained that the defined benefit plan appeared to have enough funding to provide payments to plan participants for many years, but all of that changed when financial markets turned downward in 2008 and early 2009.
As of Dec. 31, 2009, the plan's retirement benefit obligations totaled about $24.2 million, the company said in a series of questions and answers sent to plan participants. The plan's assets were only $8.6 million.
The company said other options to fund the shortfall were considered, such as trying to find sources of external funding, declaring bankruptcy and selling company assets, or doing nothing. In the end, the board chose to terminate the plan and amend it to spread assets more equitably.
"This decision breaks our hearts," the document said. "But, among four bad options, we truly believe this is the best of them. Not good. Just the best of the hard choices facing us."
Augsburg Fortress is a separately incorporated unit of the ELCA churchwide organization. The company said it sought support from the churchwide organization, but was advised that it "has no obligations or fiduciary duties with respect to the Augsburg Fortress plan." The publisher's retirement plan is separate from any ELCA-sponsored retirement plan.
John Rahja, Augsburg Fortress' chief financial officer, said assets of the defined benefit plan are separate from the company's assets. "The plan operates independently from Augsburg Fortress. Terminating this plan really doesn't affect Augsburg Fortress operations and how we run our business day to day," he told the ELCA News Service.
The company reported to plan participants that it could not cover the retirement plan's shortfall "because of our own operational challenges resulting from fewer sales to shrinking ELCA congregations, and increasing competition from the Internet and publishers outside of the Lutheran tradition."
Rahja explained that a defined benefit plan is funded solely by the organization, and benefits are determined by average earnings and length of service. The current 403b defined contribution plan gives employees the option to contribute and the organization the option to match those contributions. Employees also determine how their retirement funds are invested, he said.
For information contact:
John Brooks, Director (773) 380-2958 or email@example.com http://www.elca.org/news
ELW is to Fortress as Vista is to Microsoft
* as of August 19, AD 2009, a liberal protestant SECT, not part of the holy, catholic and apostolic CHURCH.
Christ is Born, Glorify Him!
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Worshiping God, or worshiping diversity...?
I believe the key phrase is “shrinking ELCA congregations”. This is typical of what happens when you make deals with Satan.
Ah, isn't that the liberal way? Take from those who have and give it to the have-nots? I would think, those within the ELCA should be overjoyed that AF is putting their social beliefs to work.
Just another acknowledgment of our declining standard of living - completely driven by government policies applauded and goaded on by the ELCA.