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U.S. Supreme Court Rules on ERISA's 'Church Plan' Exemption for Pension Plans
posted: Tuesday, June 6th
Pension Plans Maintained by 'Principal-Purpose Organizations' Deemed Church Plans
The U.S. Supreme Court has ruled in Advocate Health Care Network v. Stapleton that defined benefit pension plans established by so-called "principal-purpose organizations" are "church plans" exempted from the requirements of the Employee Retirement Income Security Act (ERISA), regardless of whether a church originally established the plan. For purposes of the church plan definition, a "principal-purpose organization" is an organization controlled by or associated with a church or a convention or association of churches whose principal purpose or function is the administration or funding of a plan or program for the provision of retirement benefits or welfare benefits, or both, for the employees of a church or a convention or association of churches.
Background
ERISA generally obligates private employers offering pension plans to adhere to an array of rules designed to ensure plan solvency and protect plan participants. In the original ERISA law of 1974, however, an exemption from these requirements was expressly provided for "church plans," defined as plans "established and maintained . . . for its employees . . . by a church." In 1980, Congress amended ERISA to expand the definition of a "church plan" to include plans maintained by principal-purpose organizations (defined above). In Advocate Health Care Network v. Stapleton, the respondents alleged that pension plans established by church-affiliated nonprofits that run hospitals and other health care facilities did not fall within ERISA's church plan exemption because the plans were established by the hospitals themselves--not by a church--and are managed by internal employee benefits committees.
Click here to read the Supreme Court's opinion in Advocate Health Care Network v. Stapleton.