Archdiocese to freeze pension plan, switch to defined contributionReprints
The Catholic Archdiocese of Paterson in Clifton, New Jersey, said Thursday it will freeze its defined benefit pension plan, effective June 30, and set up a new defined contribution plan.
“Action had to be taken now to ensure that the lay pension (plan) can meet its long-term obligations to future retirees at a cost that is affordable to the Diocese and its employing organizations,” Patrick Brennan, the Diocese's chief financial officer said in a statement.
The pension plan, which was set up in 1983 and, as of June 30, 2015, was underfunded by $51 million, currently has 2,805 participants, including 1,380 employees, who are currently accruing benefits, 875 retirees receiving benefits and 560 former employees who are vested and entitled to receive benefits from the plan.
Under the new defined contribution plan, which will start on July 1, “We anticipate Diocesan employers will match 50% of a full-time employee's contribution up to a pre-determined percentage of the eligible employee's compensation,” Mr. Brennan said.
“This will allow employees to choose to save and invest a percentage of their pretax salary,” he added.