New Law Sponsored by Shekarchi Requires Religious Organizations to Provide Pension Fund Updates
The governor has signed into law legislation sponsored by Senate President Dominick J. Ruggerio and House Majority Leader K. Joseph Shekarchi to require pension plans managed by religious organizations in Rhode Island to send regular updates on the financial health of the pensions to their plan participants.
“This is common-sense legislation that provides members of church-run retirement plans the same level of transparency afforded to members of private pension plans, to help them know how their pension funds are doing,” said Majority Leader Shekarchi (D-Dist. 23, Warwick). “Disclosure will help ensure that members’ retirement savings is not imperiled by mismanagement and that those in charge cannot easily obscure negligence or misconduct. People making investments should be entitled to know how their funds are doing, and this bill provides them that information regularly.”
The federal Employee Retirement Income Security Act of 1974 (ERISA) requires most private pension plans to send members a letter each year outlining the health of their plan. Pension plans administered by religious organizations claim exemption from both ERISA and GASB reporting standards. Members of these plans often have no ability to access information regarding the financial health of their pensions. Until they are required to provide this information, there remains a risk that other church-run pension plans could conceal vital financial information from plan members.
The bill (2019-S 0431Aaa, 2019-H 5287Aaa) requires that any nongovernmental pension plans that are not covered by ERISA and have 200 or more members must comply with ERISA’s reporting requirement.
The $85 million St. Joseph pension plan, which covers about 2,700 current and former employees of Our Lady of Fatima and Roger Williams hospitals, was left insolvent when contributions to it ceased following the sale of Fatima and Roger Williams to Prospect Medical Holdings in 2014. A pending lawsuit filed on behalf of plan participants alleges that hospital operators conspired to conceal from regulators and fund participants that they were vastly underfunding the pension fund for years.
The two legislative leaders submitted the bill in cooperation with General Treasurer Seth Magaziner.