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GENERAL OBSERVATIONS ON THE ARCHDIOCESE PENSION
AND THE PROPOSAL OF FREEZING THE CURRENT PLAN WITH
A TRANSITION TO A DEFINED CONTRIBUTION PLAN
CONTENTS
Abstract (Synopsis of findings)
What is the challenge?
Who benefits from a pension “freeze?”
Who is hurt by a pension “freeze?”
Why do Clergy need a pension?
What is the liability after a pension “freeze?”
Who is liable for the pension liability?
What could happen if a freeze is implemented?
What would this writer propose as a solution?
Appendix 1: Analysis of Publicly Available Documents
Appendix 2: GOA Inc Monthly Benefits Contribution Analysis
Appendix 3: Graphs
PREPARED BY
Rev. Fr. Jon S. Boukis
At the request of and in consultation with the
The Archdiocese Benefits Committee (ABC) and
The Archdiocese Presbyters Council (APC)
August 21, 2020
ABSTRACT (SYNOPSYS OF FINDINGS) The “Pension Plan for Clergymen and Lay Employees of the Greek Orthodox Archdiocese of
America” is in crisis due to a lack of funding. The assertion that the fund has underperformed
as compared to the market and has had been less than adequately managed is not a proper
conclusion. Although it is true that the fund incurred great losses in 2008 due to a market crash
(-29.2%), from 2009 through 2019 the simple average of annual rates of return of the fund was
9.19% when the actuarial estimates were 7-8%, depending on the year. The challenge with the
fund is underfunding.
The pension plan is said to be funded by “3 legs:” (1) participant contributions, (2) non-specific
contributions by the parishes and the GOA Inc (based on the number of direct employees), and
(3) employer contributions (which by plan definition is the GOA Inc.). The GOA Inc claims that
it is not the sole employer in the plan and that it is in fact a multi-employer plan. With regards
to each “leg,” the following is a synopsis of what is contained the detailed report:
1. The participants contributions were attributed to each respective account. If a participant
did not contribute as required, personal pension accruals were not allocated. This
funding “leg” did not negatively impact the fund value.
2. The contributions that were to be made by parishes and GOA Inc were partially funded.
a. The parishes of the 9 districts generally contributed the monthly benefit contribution
as required. The amount that is in arrears from parishes totals $3.4 million. Imputing
the lost growth based on parish delinquencies (back to 2016), the total impact to the
fund is approximately $4 million.
b. The GOA Inc. is current in its contributions from 2006 through the present. The GOA
Inc. was delinquent in its contributions for around 12 years and has paid the principle
balance. The lost growth on its non-payment for 12 years is approximately $1.6
million. In addition, there is no indication that the GOA Inc. ever made payments for
its employees prior to 2006 (verified back to 1999). Prior to 2006, the GOA Inc.
employees were receiving the benefits associated with participation with no
corresponding employer monthly benefits contribution (although this cannot be
accurately calculated, it is many millions of dollars.)
3. The employer is required to make contributions to keep the plan funded. The GOA Inc.
is attempting to deny its responsibility to the plan. The following report will clearly
show that the GOA Inc. has complete control over the plan. Supporting documents (the
Pension Document, Financial Statements, UPR citations, Charter citations) are provided
with the explicit/implicit effects of each. In addition, the GOA Inc. has exercised material
control over the fund of the pension (for example: the use and repayment of “lockbox”
funds as detailed in appendix 2 which is registered to the GOA Inc. tax ID).
The GOA Inc. fully controls the pension plan in management, budgetary and exercised financial
policies and administration. This writer can definitively state that it is abundantly clear, as
displayed in the full report, that the GOA Inc. is responsible for the pension and that a DB plan
is the most appropriate for our group. For the good of the clergy, the pension must continue.
WHAT IS THE CHALLENGE? The “Pension Plan for Clergymen and Lay Employees of the Greek Orthodox Archdiocese of
America” (defined benefit pension) was established in 1973 with 3 funding sources:
Archdiocese non-participant specific contributions, parish (and GOA Inc) non-participant
specific contributions, and Clergy and Lay Employee specific contributions. As a church plan,
the pension is not subject to ERISA, but it was intended to be ERISA compliant.
The pension is administered with the collaborative efforts of 3 bodies:
• The Archdiocese Benefits Committee (ABC) was established January 1, 1994, to manage
clergy benefits and provide oversight to the internal workings of the pension. The ABC
oversees the benefits office which receives and manages the contributions from individual
participants and parish (and GOA Inc) non-specific contributions (see appendix 2).
• The GOA Inc is responsible for the budgetary process of the Archdiocese including the
Metropolis staff. The GOA Inc is the employer of the plan and is responsible for the
Archdiocese non-specific contributions (see appendix 1). The GOA Inc is the entity with
whom the individual participants contracted with for the pension.
• The Holy Eparchial Synod (Synod) is the ultimate oversight organization of the
Archdiocese. The Metropolis leadership (in the person of the Metropolitan), in
consultation as the Synod is ultimately responsible for the unity of the faith and for good
order. The Archdiocese is comprised of the Direct Archdiocesan District (DAD) and 8
Metropolises. (Note: in this text, the term Archdiocese will be inclusive of all Metropolises and
GOA Inc will refer to the corporation.) It is reasonable to believe that every member of the
Synod was made aware of the accrued pension shortfall through the local syndesmos and
district ABC representative. Ultimately, the Synod should have addressed this shortfall
many years ago.
In 1998, it was reported that the pension plan was fully funded. As a result, the GOA Inc chose
not to contribute non-participant specific funding. As the plan began to have an unfunded
accrued liability in 2004, per the actuarial valuations, the GOA Inc was informed and was
requested to make contributions. For 21 years the GOA Inc refused to contribute (See Appendix
3 for comparative graphs). In addition, the parishes of the Archdiocese had amounts owed to
the pension of $3,413,118. These factors combined created an estimated $66 million in unfunded
accrued liability (shortfall). The clergy do not accrue benefits for their unmade contributions.
The responsibly of collecting from the individual parishes cannot be attributed to the GOA Inc.
The ABC representative would report to the Metropolitan and Metropolis leadership who have
the authority and responsibility to bring parishes current and/or waive for non-viable parishes.
Cumulative Amount Owed by the Parishes of Each District (as of July 24, 2020)
Direct Archdiocesan District: $82,868
Metropolis of Boston: $694,950
Metropolis of Denver: $232,800
Metropolis of Atlanta: $528,540
Metropolis of Detroit: $0
Metropolis of Pittsburgh: $537,270
Metropolis of San Francisco: $86,065
Metropolis of New Jersey: $607,135
Metropolis of Chicago: $643,490
WHO BENEFITS FROM A PENSION “FREEZE?”
The GOA Inc carries the accrued liability as a footnote on its financial statements. If the pension
is frozen, the amount of the liability will remain relatively stable by not accruing any additional
accrued liability on new pension obligation. It is important to note that the accrued liability can
increase or decrease based on life expectancies and the shortfall can fluctuate by market
fluctuation of the underlying investments and subsequent additional contributions.
“Freezing” the pension will not eliminate the liability or shortfall. The only way to eliminate
the liability or shortfall is to add additional funding or decrease future pay-outs. The proposed
freeze could be the first step in a multiple step process of not honoring the pension obligation.
It is important to note that the pension is in fact a contract between the employer and the
employee. Although the GOA Inc appears unwilling to acknowledge its position as employer
in the plan, it is evident by the disclosure of the accrued liability on the Archdiocese financial
statements that it has accepted ownership. It is also evident that the relationship exists by the
letter and within the UPR that is necessary to be ordained and subsequently assigned within the
Greek Orthodox Archdiocese (DAD or any Metropolis) that states one will participate in the
pension program (making it non-voluntary).
Therefore, if the pension is to be honored for contributions up to the freeze and current
contributions are adequate to fund current pension accruals, there is no party that benefits. If
the pension continues to accrue additional unfunded liability on new contributions, the GOA
Inc would benefit by freezing (to an extent) the current accrued liability. If this is the first step
in the process not to honor the accrued liability, the GOA Inc may wrongly perceive that it has
benefited, when in fact, all parties will be hurt.
WHO IS HURT BY A PENSION “FREEZE?”
Let us assume that the pension will be frozen at current benefit levels and that the accrued
liability will be funded for all accrued benefits as of the freeze. All active clergy will be hurt.
• Clergy with greater than 30 years until retirement – these clergymen have the smallest
impact with regards to accumulating enough to retire. A defined contribution plan with
the same funding levels as the current pension plan will yield a retirement account that
could be comparable to the current pension. With 40 years of contributions, one can
even do a little better if the achieved rate of return is greater than 9% pre-retirement and
estimated 6% post-retirement. Any investment that is shorter in length or lesser in rate
of return will provide much less.
• Clergy with 15 to 25 years until retirement – Clergy in this group have been in the
worst accumulation years of the pension and do not have the years to make up the
difference in a contributory retirement plan without great increases in contributions.
• Clergy with 5 to 15 years until retirement – these clergy are most greatly affected. They
are entering the prime years of the current pension with their greatest level of income
and contributions and the shortest time horizon for return. There is no level of
contributory retirement plan that can compensate for the loss of future pension accrual.
• Clergy over 65 but under 70 years of age – the best financial course of action for these
clergy is to immediately retire and collect the pension. Continuing in full-time ministry
will have a negative impact on total retirement settlements.
WHY DO CLERGY NEED A PENSION?
Pensions are designed for those who are “servants” to the community. The easiest way to
determine who is a “servant” is to examine one’s pay structure. Typically, if you are paid by a
predetermined scale, you are a servant; if your pay is determined by market conditions, you are
not. Therefore, the military, teachers, firefighters, police and priests are typically paid on a
scale, and receive a pension (DB – defined benefit). In contrast, accountants, attorneys,
engineers, financial planners, real estate agents, and entrepreneurs compete in the open market
and have access to various types of contributory retirement accounts.
It has been suggested that a defined benefit pension plan is no longer the preferred choice of
nonprofit organizations and that, in fact, less than 3% of nonprofits have DB programs.
According to a joint study by the TIAA‑CREF Institute and Independent Sector published in
2012 (which is the most recent comprehensive study available), 30% of nonprofits maintained a
defined benefit program. This is 10 times what has been reported to our clergy. In addition, for-
profit businesses average 12% employment turnover annually, whereas nonprofits average 19%
employment turnover annually (turnover statistics from Forbes: “45% Of Nonprofit Employees
To Seek New Jobs By 2025: Report,” February 10, 2020). Given the short tenure for the average
nonprofit employee, one could argue that a defined contribution plan would be more
appropriate. In the case of our clergy, turnover is virtually 0%. The comparison of the GOA
clergy to a nonprofit is inappropriate.
Clergy do not have the ability to enter the open market and negotiate compensation packages.
It is by these criteria that a pension plan is by far the most suitable. In addition, a clergyman
can also have a personal contributory plan. For most clergy, their household income allows for
investment in Roth IRA’s, which are superior to 403b’s for most. If clergy households are able
to “max out” Roth IRA’s, a 403b can already be established for additional savings without the
elimination of the pension benefit. The pension becomes a foundation for the other programs.
WHAT IS THE LIABILITY AFTER A PENSION “FREEZE?” If the current pension is frozen without any other alteration, the pension accrued liability will
remain at current levels – reported as being $65.9 million underfunded (minimum ERISA
funding levels). The benefits that have been accrued must still to be paid when participants
retirement.
WHO IS LIABLE FOR THE PENSION LIABILITY? It is important to note that the pension is in fact a contract between the employer and the
employee. Although the GOA Inc appears unwilling to acknowledge its position as employer
in the plan, it is evident by the disclosure of the accrued liability on the GOA Inc financial
statements, among other things, that it has accepted ownership. The centralization of the
pension, the financial statements, the requirement for clergy to participate in the plan, and the
exercised control of the funding (or refusal to fund) by previous administrations constitutes
ownership and therefore responsibility for the accrued liability (see appendix 1).
In addition, there are many documents that are publicly available to substantiate the GOA Inc’s
material control of the pension program. Please refer to Appendix 1 for excerpts of these
publicly available documents and the explicit/implicit effect of each excerpt.
WHAT COULD HAPPEN IF A FREEZE IS IMPLEMENTED? There are 110 active priests between the ages of 60 and 70 that are currently serving the
Archdiocese/Metropolises. If we assume an average distribution of ages, it is reasonable to
estimate 65 priests that will be 65 or older in 2021. Most of these priests will retire virtually
immediately. If a priest can receive a pension at 65 and cannot grow it beyond 65, there is no
financial incentive to continue working. The only exception would be for the priest that cannot
financially afford to retire. With many priests retiring and drawing their pensions, the fund
would have much greater outlays and significantly lower contributions.
With many priests retiring, there would be a resulting shortfall of priests in the Archdiocese.
There are a number of effects this potentially could cause:
1. the lack of clergy for smaller parishes as priests are moved to the larger ones –
potentially resulting in the closure of many small parishes;
2. with less parishes, the Archdiocese (including Metropolis administration cost) budget
would be spread over less parishes causing individual parish assessments to go up;
3. Priests become a commodity in which priests move to be paid more (out of supply and
demand and the need to supplement personal retirement savings);
4. less parishes with less assigned clergy would reduce the amount of $700 per month
benefits contributions; and/or
5. an influx of clergy from other jurisdictions or from outside the United States.
These are merely potentialities, but a clergy shortage would need to be equalized in some way.
In addition, many parishes may feel as though their priest has been dishonored by the Church
at large. This would result in some parishes choosing to no longer remit the $700 per month
benefit contribution and perhaps even their national total commitment.
Ultimately, this writer believes that it is not out of the realm of possibility that a “scape goat”
will be needed to absorb the brunt of the negative ramifications resulting from the freezing of
the pension. The result, be it misplaced, will most likely ultimately be put upon our Synod and
the Archbishop.
This writer believes that we could see: priests not being able to retire, mass clergy retirements,
the pension fund quickly decimated, the rising of individual parish Archdiocesan assessments,
the closing of parishes, dissention of our parishes and clergy, and forced changes in our
hierarchy. Much of this may impact our faithful – just as the financial crises of the Archdiocese
did – only this crisis “hits much closer to home.”
WHAT WOULD THIS WRITER PROPOSE AS A SOLUTION?
It is the opinion of this writer that a pension (DB) plan is the best option for our clergy. It is
possible to devise a DC plan that will provide substantially similar quantitative results. It is
possible to have many qualitative enhancements (i.e. tax, portability, inheritance, flexibility,
control, etc.) A DB being most suitable because:
1. Clergy are servants;
2. Clergy serve for life;
3. Clergy receive scaled compensation;
4. Clergy are inherently underpaid vs their counterparts with similar education and
responsibility;
5. Clergy are typically oriented toward quality-oriented, not quantity-oriented activities
(making them less focused and capable in financial management);
6. DB’s provide clearly defined retirement benefits and clearly defined survivor benefits
(even more clearly defined than Social Security);
7. DB’s provide equal results (similar to the scale); and
8. DB’s are not available except though an employer sponsor.
The above realities make a DB plan far superior for our specific group. Given the task of this
analysis was to provide a comprehensive analysis of what would be necessary to keep the
current pension plan versus freezing the pension and installing a DC plan, solutions for each
are following:
(1) Put in place funding to save the existing pension (DB)
In order to allow the current pension program to continue, the accrued liability must be funded.
The accrued liability is currently estimated at $128 million, using an assumed actuarial rate of
return of 5.99% ($65.9 million of which is underfunded). Below are the steps that this writer
would propose to allow the current plan to continue:
1. Determine the amount that is due from the GOA Inc to cover the liability as defined by
the pension document and supported by the citations in Appendix 1. This is a simple
calculation as derived from the actuarial report which would be the ERISA minimum
funding level ($128 million) less the fund balance ($62 million) less the amount owed by
parishes in arrear ($3.4 million). By this formula, the GOA Inc must raise $61.6 million.
2. The pension document must be rewritten to reflect changes in funding policies and
remove perceived ambiguities using concise clear language. In addition, this writer
would suggest that the minimum retirement age be altered to reflect normal social
security retirement age instead of the current static age 65 (which was the social security
age when the pension plan was first implemented).
3. The actuary (currently Mercer) will provide guidance as to current and future funding
requirements. The actuarial guidance must be implemented so that the entire
Archdiocese can ensure the fund continue to be fully funded (or slightly overfunded)
with regards to the true liability.
(2) Terminate the existing pension plan and begin a comparable
comprehensive defined contribution plan
Terminating the existing pension
In the creation of a DC plan, the existing DB plan would need to be “frozen” with the current
liability being defined and retired through the purchase of a group annuity. Those currently
receiving pensions would be “lifted out” and would continue to receive their pensions.
Participants who have not yet retired would elect either to receive the current vested pension
benefit at the time of retirement or a lump sum distribution “rolled” into the new DC program.
Once all benefits have been secured through group annuities or roll-over lump sums, the plan
would have no participants and would be terminated. The benefits of this approach, which are
specific to the employer while providing no real benefit to the participants, are as follows:
1. Eliminating current plan liability with no future liability accrual potential.
2. Current parish and employer contributions are for current year plan obligations.
3. Plan has no active management except for current year contribution analysis.
Begin a comparable comprehensive defined contribution plan
In order to design a comparable DC plan for our clergy, we must recognize a few key facts:
1. Defined contribution plans are most beneficial for those who have many years prior to
the distribution of funds (retirement). Those with few years until retirement do not
benefit nearly as greatly.
2. The pension plan accruals from the early years of one’s participation are extremely low;
inversely, the pension plan accruals in the last 10-15 years prior to retirement are
extremely high.
3. Given (1) and (2), for participants that are over the age of 45, having received the
“worst” years of pension accruals (DB) will enter into the “worst” years of DC growth.
In order to create a DC plan that provides a comparable retirement for all participants of the
plan, multiple funding components will be necessary.
1. An employer match for elective contributions of the participant.
2. A non-elective contribution by the employer (usually referred to as “profit sharing”)
3. Catch-up employer contributions allocated by current age and years.
In order to make sure that all participants are made whole in a DC plan, the following
contribution rates would need to be implemented. The amount that the employer would need
to contribute would be a much as 12% for those age of 60 and over with more than 26 years of
service. Note: this plan could provide a similar level of financial support, but it is far less
appropriate than continuing the DB for all of the reasons stated on the previous page.
Years
Ordained
Minimum
Age
Non-Elective
Base
Non-Elective
“Catch-Up”
(over 45)
Non-Elective
Contribution
(over 45)
Match
Base
Match
“Catch-Up”
(over 45)
Match
Contribution
(over 45)
1-5 NA 0% 0% 0% 4% 0% 4%
6-10 NA 2% 0% 2% 4% 0% 4%
11-15 45 2% 0% 2% 4% 1% 5%
16-20 50 3% 1% 4% 4% 2% 6%
21-25 55 3% 2% 5% 4% 2% 6%
26 & up 60 3% 3% 6% 4% 2% 6%
➢ “Catch-Up” provision for those 45 years of age or older at plan inception.
➢ Number of Years Ordained is in whole years rounded up to full years.
➢ Earnings base is Salary and Housing (or annual value of parsonage) plus SECA
reimbursement.
➢ "Catch-Up" Grandfather provision is for participants over the determination age (45) at
time of plan inception only and will be phased out as plan continues.
Appendix 1: Analysis of Publicly Available Documents
From the 2017 Pension Document:
WHEREAS, The Greek Orthodox Archdiocese of America (hereinafter referred to as the
“Employer”) heretofore adopted The Pension Plan for Clergymen and Lay Employees of the
Greek Orthodox Archdiocese of America (hereinafter referred to as the “Plan”) for the benefit of
its eligible Employees, effective as of January 1, 1973; (page 1)
1.18. “EMPLOYER” shall mean the Archdiocese, the Direct Archdiocesan District, each
Metropolis of the Archdiocese, the Hellenic College/Holy Cross School of Theology, and any
affiliate which, with the approval of the Archdiocese Benefits Committee, and subject to such
conditions as the Archdiocese Benefits Committee may impose, adopt the Plan, and any
successor or successors of any of them. (p. 4)
POINT FROM TEXT: Plan adopted by GOAA while referring to itself as the
employer.
POINT FROM TEXT: The definition of employer includes the “Archdiocese”
independent of the 9 districts as a distinct entity.
7.2. EMPLOYER CONTRIBUTIONS. The Employer shall make such contributions from time to
time, which, in addition to Participant contributions pursuant to Section 7.1, it shall deem
necessary to provide the benefits of this Plan. It is the intention of the Archdiocese and the other
Employers that the minimum amount of such contribution shall be that amount which is
required to meet the minimum funding standards of The Employee Retirement Income Security
Act of 1974 (‘ERISA”) as originally enacted, as if such standards were applicable to the Plan.
However, the Employer is under no obligation to make such contributions or to make any
contributions under the Plan after the Plan is terminated, whether or not benefits accrued or
vested prior to such date of termination have been fully funded. (p. 33)
POINT FROM TEXT: The employer, (including the GOAA as defined above), “shall”
(mandatory legal language – “shall” is mandatory and “will” is
discretionary in standard legalese) make contributions.
POINT FROM TEXT: According to the plain language of the text, the obligation ceases
only after the plan is terminated (see below for more
confirmation).
POINT FROM TEXT: The obligation for employer contributions to a continuing or a
frozen plan is mandatory, not discretionary.
10.2. TERMINATION OF PLAN. While the Archdiocese intends to continue the Plan
indefinitely, nevertheless it assumes no contractual obligation as to its continuance and the
Archdiocese Benefits Committee may terminate the Plan at any time. In the event the Plan is
terminated (or partially terminated as determined by the Internal Revenue Service) the benefits
of effecting Participants shall be 100% vested. In the event of Plan termination the assets of the
Trust Fund shall be allocated to the extent of the sufficiency of such assets, for the purpose of
providing benefits accrued under the Plan to the date of termination of the Plan for such
Participants and their joint or contingent annuitants and Beneficiaries for whom and/or to the
extent that such benefit has not already been purchased in accordance with the Trust
Agreement and which will be payable in accordance with the provisions of the Plan and said
Trust.
The allocation of all such remaining assets for each Employer with respect to Participants of this
Plan shall be in the manner and order described in the following paragraph, after deduction of
any and all appropriate expenses incurred in connection with the Plan’s termination:
The Employer reserves the right to discontinue contributions under the Plan and to terminate
the Plan in whole or in part with respect to a specific group of Employees. In the event of full
or partial termination, Employees affected thereby shall have a nonforfeitable right to their
Accrued Benefits, to the extent funded. The Administration Committee, upon full termination,
shall cause the assets of the Plan to be allocated for the purposes set forth in, and in the order of
priorities established by, Section 4044 of ERISA. Any residual assets remaining thereafter shall
be returned to the Employer. The Employer shall not be liable to Participants for benefits
other than those which can be provided by the Plan’s assets. (p. 45-46)
POINT FROM TEXT: The document must be read in whole with an effort to make it
consistent. The first bolded phrase has two requirements and
the second requirement has two options. Thus, (1) the Employer
can discontinue contributions AND terminate the plan in
whole. Or (2) the Employer can discontinue contributions AND
terminate the plan in part with respect to a specific group of
employees. There is no provision, especially when read with the
language about Employer Contributions on page 33 of the plan,
that allows the Employer to simply discontinue contributions
without a termination except after a termination.
From the Archdiocese Benefits Financial Statement:
From the 2015-2016 Archdiocese Benefits Financial Statement:
3. FUNDING POLICY The Archdiocese maintains a Church Plan, as such, the Plan is not subject
to the Employee Retirement Income Security Act ("ERISA"). It is the intention of the
Archdiocese and the participating affiliated organizations to fund the Plan in accordance with
the initial minimum standards of ERISA as originally enacted, as if such standards were
applicable to the Plan. However, the Archdiocese is under no obligation to make such
contributions or to make any contributions under the Plan after the Plan is terminated whether
or not benefits accrued or vested prior to such date of termination have been fully funded.
Consequently, amendments to ERISA after 1974 have not been taken into account.
POINT FROM TEXT: This document recognizes the Archdiocese as the one
maintaining the plan.
5. PARTY-IN-INTEREST Certain plan investments were managed by John Hancock Retirement
Plan Services through March 2016. Certain plan investments are managed by State Street Bank
and Trust ("SSBT") from March 2017 through December 31, 2016. SSBT is the Trustee as defined
by the Plan and, therefore, these transactions qualify as party-in-interest transactions.
In 2016, the Archdiocese borrowed approximately $850,000 from the Plan, of which $500,000
remains due from the Archdiocese as of December 31, 2016 that was subsequently paid in
2017.
POINT FROM TEXT: The Archdiocese can borrow money from the plan. (Questions:
Was interest collected?)
From the 2012-2013 Archdiocese Benefits Financial Statement:
3. FUNDING POLICY The Archdiocese maintains a Church Plan, as such, the Plan is not subject
to the Employee Retirement Income Security Act (“ERISA”). The Archdiocese intends to fund
the Plan in accordance with the initial minimum standards of ERISA as originally enacted.
Consequently, amendments to ERISA after 1974 have not been taken into account.
POINT FROM TEXT: Certain language included in 2015-2016 was added subsequent
to 2012-2013: “…and the participating affiliated
organizations…”and “However, the Archdiocese is under no
obligation to make such contributions or to make any
contributions under the Plan after the Plan is terminated
whether or not benefits accrued or vested prior to such date of
termination have been fully funded.”
POINT FROM TEXT: The obligation ceases only after the plan is terminated.
From the 2011-2012 Archdiocese Benefits Financial Statement:
3. FUNDING POLICY The Archdiocese maintains a Church Plan, as such, the Plan is not subject
to the Employee Retirement Income Security Act (“ERISA”). However, the Archdiocese intends
to fund the Plan in accordance with the initial minimum standards of ERISA.
POINT FROM TEXT: Certain language included in 2015-2016 was added subsequent
to 2012-2013: “Consequently, amendments to ERISA after 1974
have not been taken into account.”
From the 2007-2008 Archdiocese Benefits Financial Statement:
The Plan is funded in accordance with the initial minimum standards of the Employee
Retirement Income Security Act (“ERISA”), as originally in effect in 1974.
POINT FROM TEXT: “The Plan IS funded…,” not “However, the Archdiocese
intends to fund…”
The above financial statements clearly show a trend. The funding policy was clearly intended to
be ERISA compliant. It appears as though the funding policy was adjusted during each
reporting cycle to reflect a material change over multiple cycles. This trend appears to be
deliberate to relieve the GOA Inc of its liability in the pension plan.
From the Uniform Regulations:
From the 1996 UPR:
Chapter 2, Article III, Section 10: It shall be mandatory for each Priest to join and maintain
membership in the Archdiocesan Pension Program in accordance with the provisions of said
program.
POINT FROM TEXT: Priest participation in the pension is mandatory. (The 1996 UPR
refers only to the Archdiocese as the “highest spiritual and
governing authority of the Greek Orthodox Church in the
Americas.” There is no reference to dioceses or Metropolises.)
From the 2005 UPR:
Part 3, Chapter 1, Article 17, Section 6: When a Priest must be reassigned for any reason, the
respective Hierarch will make every effort to give him another assignment. In the event that a
Priest is removed without cause, or cannot perform his priestly duties, and has not arbitrarily
refused reassignment, the Archdiocese will provide for maintenance of his current
remuneration and benefits, until he is reassigned, provided he does not refuse reassignment.
POINT FROM TEXT: Archdiocese has taken responsibility for clergy benefits.
Part 1, Article 5, Section 4b. Item 5: Prepare the proposed budget with the Archbishop, the
Finance Committee and the appropriate heads of the departments of the Archdiocese, for
presentation to the Archdiocesan Council, for recommendation to the Congress.
POINT FROM TEXT: The executive committee of the Archdiocese is the budgeting
authority for the entire Archdiocese including Metropolis
funding and ministry budgets.
Part 3, Chapter 1, Article 34, Section 8B. Each Parish must remit monthly to the Archdiocese the
portion of its Total Commitment allocation for Archdiocesan and Metropolis needs as
determined by the Clergy-Laity Congress and the respective Hierarch.
POINT FROM TEXT: The Archdiocese (not Metropolises) is the only financial
authority and collects all obligations.
From the 2017 UPR:
Part 1, Article 1, Section 1D: (The Archbishop) Administers the Archdiocese as a whole and is
directly responsible for pastoring and governing his own Archdiocesan District.
POINT FROM TEXT: The Archbishop is responsible for “pastoring and governing” a
district (DAD), but “Administers the Archdiocese as a whole.”
Part 1, Article 4, Section 13: The Archdiocese shall prepare the Agenda for the Congress and
shall submit it to the Ex Officio Delegates and the Parishes no later than sixty (60) days prior to
the convening of the Congress. It is the responsibility of each Parish to disseminate the Agenda
and any other materials pertaining to the Congress to its delegate.
POINT FROM TEXT: The Archdiocesan Council not only is the only official body
that can assess funds (from a prior notation), it determines the
Agenda for the Congress.
Part 1, Article 5, Section 2: (Archdiocesan Council Membership and Term)
(A) Composition of the Council: The Council shall be comprised of the following voting
members
1. The Archbishop as President
2. The Members of the Synod
3. The Auxiliary Bishops
4. The Chancellor of the Archdiocese
5. Fifty-one (51) members appointed by the Archbishop who shall serve at his discretion
6. Each Past President of the Council (or other lay principal officer, how so ever titled)
7. The Chancellor of the Archdiocesan District, the Chancellors of each Metropolis, the
Vice President of the Archdiocesan District Council, the Vice Presidents of the Local
Councils, as well as one Clergy and two (2) laypersons from the Archdiocesan District
and each Metropolis elected by the Local Assembly held prior to the Congress
(B) Ex Officio Voting Members (by virtue of their office) as follows: The Presidents or
Executive Directors in the event there is no office of “President” of:
1. Archons of the Ecumenical Patriarchate
2. Archdiocesan Cathedral of the Holy Trinity
3. Archdiocesan Presbyters Council
4. Archdiocesan Benefits Committee
5. Hellenic College/Holy Cross School of Theology
6. National Forum of Church Musicians
7. National Ladies Philoptochos Society, or its President’s Designee
8. National Sisterhood of Presvyteres
9. Retired Clergy Association
10. St. Basil’s Academy
11. St. Michael's Home
12. St. Photios National Shrine
13. Young Adult League
POINT FROM TEXT: The Archdiocese (GOA Inc.) “as a whole,” (not the DAD or
Metropolises) controls 62 of the 111 (may vary slightly based on
number of AC past presidents) appointments of voting
members to the Archdiocesan Council.
Part 1, Article 5, Section 4: (Executive Committee)
(A). Membership: In addition to the Archbishop the following are members of the Executive
Committee:
1. The Members of the Synod
2. The Vice President, Secretary and Treasurer of the Council
3. Up to six (6) additional members of the Council to serve on the Executive Committee
whom the Archbishop may designate, one of which will be the Chairman of the
Finance Committee.
4. Ex-Officio Members without a vote:
a. The Chancellor of the Archdiocese
b. The Executive Director of Administration of the Archdiocese
POINT FROM TEXT: The Archdiocese (GOA Inc.) “as a whole,” (not the DAD or
Metropolises) controls at least 10 of the 18 appointments to the
Archdiocesan Council Executive Committee. (The 8 that are not
under control of the GOA Inc are the 8 Metropolitans although
they are the ultimate oversight body as the Synod.) It is this
committee that determines the budget and the clergy laity
congress agenda.
From the Charter of the Archdiocese: Article 4 (Governance of the Holy Archdiocese) a. - Comprised of the Archbishop as President
and the Metropolitans as its members, the Eparchial Synod constitutes the ecclesiastical
instrument of governance of the Archdiocese.
Article 6 (Responsibilities and Rights of the Archbishop) - The Archbishop of America presides
over the Holy Eparchial Synod and is the Exarch of the Ecumenical Patriarchate in the United
States of America. In his capacity as Archbishop, as President of the Eparchial Synod and as
Exarch of the Ecumenical Patriarchate, among other rights and responsibilities, the Archbishop:
Is responsible, together with the Eparchial Synod over which he presides, to the Ecumenical
Patriarchate concerning the canonical and orderly functioning, life, governance and activities of
the one and indivisible Archdiocese.
Article 7 (Responsibilities and Rights of the Metropolitans) - b. Among the rights and
responsibilities of each Metropolitan are the following: To be a member of the Eparchial Synod
and participate in its work, forwarding to the Archbishop an annual report regarding the
progress of the work of his Metropolis; (and) To administer his Metropolis in a considered,
orderly, harmonious and fiscally responsible manner for the common good.
POINT FROM TEXT: Archbishop with the Eparchial Synod is responsible for
“orderly functioning, life, governance and activities of the one
and indivisible Archdiocese.” Whereas each Metropolitan is
“To administer his Metropolis in a considered, orderly,
harmonious and fiscally responsible manner for the common
good.”
From Archdiocese Financial Statements:
On the following 2 pages are excerpts from the 1999 GOA financial statements (with
comparative totals from 1998) and the 2002-2003 GOA financial statements. In each case it is
evident that the GOA carried a liability for what appears to be the portion of benefits that is
unfunded. The notes to the financial statements clearly identify that the GOA recognizes itself
as employer and liable for future benefits due participants.
Appendix 2: GOA Inc Monthly Benefits Contribution Analysis Each month the parishes are required to make a benefit contribution for each assigned priest.
Likewise, the GOA Inc makes a benefit contribution for every employee of the GOA Inc.
including the lay employees (office staff, administration, district youth directors, etc.) and
clergy (Metropolitans, auxiliary Bishops, chancellors, ministry leaders, etc.). The benefit
contribution is for ancillary benefits and administration of the benefits programs with any
remainder being deposited to the pension fund. (The current monthly benefit contribution is $700.)
In creating the graph for appendix 3 which displays the hypothetical fund value had all
contributions been made as required, a clear understanding needed to be formulated regarding
the large amount that was owed to the plan from the GOA Inc. Per the benefits office, around
2014 the GOA Inc. presented a spreadsheet for amounts owed for the GOA Inc employees
dating back to 2006. The spreadsheet revealed $4.3 million in benefits obligations for 2006-2016.
This obligation was paid to the benefits office in full. According to the analysis in appendix 3,
the fund had an opportunity cost of $1.6 million (in growth) which the GOA Inc. did not cover.
In addition, during the examination of the spreadsheet from the GOA Inc. regarding this
amount owed, the loan that was referenced in the 2015-2016 Archdiocese Benefits Financial
Statement for $850kwas probed.
The results of this examination revealed 2 instances in which the GOA Inc. exerted material
control over the Pension Plan confirming that it is the employer:
1. There is no indication that the GOA Inc. made any monthly benefits contributions for
any employees prior to 2006 (2006-2016 was made retroactively). Per conversation with
the Benefits Office, prior to receiving the spreadsheet with an outline of amounts owed
dating back to 2006, the GOA Inc. never submitted any type of payment to the Benefits
Office. This writer questioned the period prior to 2006 and was told that the GOA Inc.
stated that it was not required to make a payment because “the employer does not have to
contribute due to an actuarial credit showing the plan is actuarially fully funded.” This
means because of its status as employer, the GOA Inc. did not make any employer
contribution or any monthly contribution for its employees’ benefits. This is a full
admission of ownership as employer. It also is at best misappropriation of funds. The
monthly amount for each and every employee was due. As a result, parishes made
contributions in excess of what was required in order to “cover” the GOA Inc.
2. The “lockbox” is not secure. When parishes send their contributions to the benefits office,
they are deposited in the “lockbox” and then subsequently transferred to the pension
trust. The “lockbox” account is registered under the tax ID (EIN) of the GOA Inc, which
gives the GOA Inc. access as signatories. The loan referred to above was money that the
GOA Inc. “borrowed” from the “lockbox” and subsequently returned. Again, at best, a
misappropriation of funds.
It is abundantly clear that the GOA Inc. exercised material control over the pension plan and is
the employer and responsible party for the pension. By not paying the monthly benefit
contribution for its employees “as the employer,” and “borrowing” from the “lockbox,” the
GOA Inc exerted undeniable control and, in this writer’s opinion, poor judgement.
Appendix 3: Graphs Below is a graph of plan assets and liabilities as presented by the GOA Inc to the entire
Archdiocese via webinar and goarch.org. It was reported that the liability shortfall was partially
the result of poor rates of return and market conditions. In addition, the GOA Inc did not make
non-employee specific contributions from 1999 to 2018 and parishes had arrearages totaling
$3,413,118 as of July 2020. Below is the graph as presented.
Below is a graph showing the impact to the plan assets had the GOA Inc chosen to contribute
non-employee specific contributions of $1.5 million annually beginning in 2004 (for 20 years) as
deemed necessary by Mercer. The graph is adjusted to show the impact had all parishes and
the GOA Inc. been current in the benefits obligation from 2016 for parishes and 2006 for the
GOA Inc (See appendix 2 for GOA Inc monthly benefit contribution analysis) (*See note below for
return assumptions.)
*See note below for rate of return assumptions
Rate of Return Assumptions:
Annual investment rates of return were not available for all years. For the years 2004 and 2008-
2019 except 2016, actual investment rates of return were utilized for our fund as invested. For
2016, and weighted average rate of return was calculated given partial year rates of return from
multiple TPA’s. For 2005-2007, the rate of return was calculated from beginning and ending
fund values and investment results as reported by the TPA. (2020 is year to date as of July 31,
2020) The ending plan asset value may have a small margin of error due to rounding and the
calculation of rates of return.
Conclusions:
In comparing the first graph as presented by the GOA Inc and the second graph showing
Mercer’s recommendation of commencing employer contributions at the rate of $1.5 million
annually for 20 years as required by the pension document (see appendix 1) and correction for
parish and GOA Inc arrearages, it is more than apparent that market conditions and rates of
return (which averaged much greater than the 4.26% that was reported; 4.26% represents the
change in fund value not the portfolio investment rate of return – the fund’s change in value
also includes pension payments to retirees which greatly exceeded incoming contributions; the
simple average of the annual rates of return for the fund from 1999-2019 was 6.49% and from
2004-2019 was 6.90%) were immaterial in the level of underfunding of the pension accrued
liability. Had the GOA Inc followed the recommendations of Mercer, the pension would be
underfunded, as defined by ERISA, by $13 million ($3.4 million of which is parish arrearages), a
75% decrease in the unfunded accrued liability. This 75% decrease correlates directly with
Mercer’s plan which is in the 15th year of a 20 year funding plan (75%).
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