Lutheran pastors sue ELCA over annuity cuts
By John Welbes
Updated: 01/11/2011 03:26:26 PM CST
Four retired Lutheran pastors are suing their former employer, the Evangelical Lutheran Church in America, alleging that the church guaranteed lifetime annuity payments that it later decided to "drastically reduce."
While the retirees had been planning on a lifetime of steady and growing pension payments, they were told in September 2009, that the guaranteed payments would be cut 9 percent in 2010, with more cuts to come in 2011 and 2012.
And the four pastors are not alone.
Over the last 21 years, more than 10,000 eligible employees elected to take their retirement accumulations in a lifetime annuity or a pension, according to court filings from the ELCA, which has its headquarters in Chicago.
The pastors' lawsuit seeks class-action status and hopes to win back full payments for all retirees affected by the cut in annuity payments. The suit was filed in Minnesota state court last month and moved to federal court recently.
The ELCA Board of Pensions, in a message to the Pioneer Press, said that the cuts are the result "of the historic and virtually unprecedented downturn in the investment markets in late 2008 and 2009."
The board's three-year plan of "corrective actions" seeks to protect the long-term viability of the fund, and the message noted that "currently, we are on track to return the fund to a fully funded status, due primarily to improved investment market performance" and actions taken by the board.
The reduced payments for retired employees "have really impacted people," said Vincent Escades, a Minneapolis attorney representing the pastors in their lawsuit. "They didn't live off much to start with in their positions. They lived pretty modest lifestyles."
The plaintiffs in the lawsuit are the Rev. Benjamin A. Johnson, Dr. Ronald A. Lundeen, the Rev. Larry D. Cartford and the Rev. Arthur F. Haimerl.
"It really matters to people who are living on fixed incomes," Escades said.
The lawsuit, filed in December and recently moved to federal court, has the potential to impact a larger number of retirees than another pension-related lawsuit filed against Augsburg Fortress Press and the ELCA last year. Augsburg Fortress Press, based in Minneapolis, is the publishing arm of the ELCA. In the Augsburg Fortress case, about 500 retirees and employees were affected by the pension plan's termination.
Employees and retirees who participated in Augsburg Fortress' pension plan were told a year ago that the plan would be terminated. Participants were given a lump sum payment instead that represented a portion of the money they would have received. In that case as well, Augsburg Fortress pointed to investments that lost value in 2008 and 2009.
John Welbes can be reached at 651-228-2175.