You might thing that underfunding pension plans is the sole purview of unscrupulous local and state governments. Unfortunately, irrational optimism, an inability to accurately plan for the future, and avarice are all very human weaknesses exhibited by people in all walks of life—even faith-based and church-affiliated hospitals and charities.
The AP has the story:
Pension shortfalls at some religiously affiliated hospitals, businesses and social service agencies are raising new alarms and spotlighting a largely overlooked gap in the law protecting Americans’ retirement benefits.
“I felt betrayed, not only by the health care system, but by the Sisters of Charity, and I got betrayed by the church,” said Armantina Pelaez, a former crisis counselor at St. Mary’s, which quietly converted its federally insured pension plan to an uncovered church plan in 2001. The hospital’s pending purchase by a for-profit company will see Pelaez and others get a fraction of their expected pensions. “They don’t practice what they preach.”
It’s interesting that charities and governments are ripping employees off on pensions worse than private businesses. The answer to this apparent puzzle isn’t that corporate CEOs are somehow more virtuous than men of the cloth or big city politicians; it’s that we have tough laws governing corporate pensions and weaker ones when it comes to charities and governments.
We’ll also take this occasion to remind our readers why we think defined contribution pensions are the best bet for workers today. There are no pension programs that are totally risk free, or course. Life just doesn’t work that way. But too many people continue to underestimate the risk of defined benefit plans in a turbulent economic and political landscape.