ERISA Church Plan Exemption Under Attack: Implications for Church-Affiliated Employers Administering Pension Plans

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Litigation over church-affiliated employer pension plans has increased exponentially. The plaintiffs in these cases, primarily plan participants, challenge whether their employers’ pension plans should qualify for an exemption from ERISA’s reporting, accrual, vesting, and funding requirements for pension plans, as well as the Pension Benefit Guaranty Corporation’s requirement to pay pension insurance premiums.

The law remains unsettled in this area. The federal district courts are split on whether the ERISA church plan exemption applies to church-affiliated employers. At the appellate level, the Ninth Circuit denied a church-affiliated hospital the use of the church plan exemption in Rollins v. Dignity Health in July 2016.

The Seventh and Third Circuits have also recently ruled against church-affiliated employers. Two faith-based health systems have petitioned the U.S. Supreme Court to decide whether their pension plans meet ERISA’s exemption requirements. IRS guidance in this area conflicts with the court rulings denying the use of the church plan exemption, further complicating matters.

Counsel for church-affiliated employers must stay abreast of the developments in this area in order to advise their clients on structuring, operating and funding their pension plans and mitigating the risk of litigation.

Listen as our authoritative panel reviews recent developments in church plan litigation and lessons for church-affiliated employers for administering their pension plans and protecting them against the risk of litigation.