GENERAL OBSERVATIONS ON THE ARCHDIOCESE ......Archdiocese. The Metropolis leadership (in the person of the Metropolitan), in consultation as the Synod is ultimately responsible for

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?)



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.



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.”


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%).