2010 set off on the wrong foot for some 500 employees of the ELCA's publishing ministry, reports the pretty good lutherans blog this morning. ELCA observers might keep the following in mind the next time they read ELCA officials addressing "economic justice" issues.
Shrimp again. We'd ask you to read that last sentence again, but instead we'll quote from the "Questions and Answers Regarding Termination of the Augsburg Fortress Retirement Plan" that Augsburg Fortress included with Ms. Lewis' letter. We'll emphasize a telling sentence:Augsburg Fortress cancels retirement plan
Hundreds of Augsburg Fortress workers and retirees learned over the weekend that their retirement plan is being canceled, according to documents obtained by Pretty Good Lutherans.
"These decisons and actions break our hearts and we apologize, but they are necessary," wrote Beth Lewis, president and C.E.O. of the Minneapolis-based company, in a letter to employees and retirees dated New Year's Eve....
The documents said the retirement plan's assets totaled $8.6 million and estimated its obligations at $24.2 million. If Augsburg Fortress were to declare bankruptcy and sell its assets, "even this drastic measure would not entirely fund the plan's shortfall," the documents said....
Lewis wrote that an estimated 500 individuals are impacted by the termination of the plan, which becomes effective March 5. Monthly benefits to retirees under the plan end March 1. Most plan participants, including retirees, will receive some type a lump sum payment, though not as much as expected.
"Because the plan is severely underfunded, there is not enough money to pay the full benefits that plan participants otherwise would have received … ," Lewis wrote. The company's current employees can participate in a 403(b) retirement plan used by many not-for-profits.
Lewis' letter was accompanied by a four page document titled, "Questions and answers regarding termination of the Augsburg Fortress retirement plan."
Augsburg Fortress is incorporated as a separate program unit of the ELCA and maintains a separate retirement plan from the denomination. The ELCA was approached for financial support, but "advised us that it has no obligations or fiduciary duties with respect to the Augsburg Fortress plan," according to the documents.
10. Why can't the ELCA churchwide organization make up for the funding deficiency in the plan?"No obligations or fiduciary duties." Shrimp'll recall that the next time we hear a plea to not "withhold" mission support.
A. We thoroughly explored options for overcoming the funding deficiency, including seeking support from the ELCA churchwide organization. However, the ELCA churchwide organization advised us that it has no obligations or fiduciary duties with respect to the Augsburg Fortress plan. Augsburg Fortress is a separately incorporated program unit of the ELCA and our retirement plan is separate from any plan sponsored by the ELCA.
The Q&A reveals that the retirement plan's termination came about for the same reasons it happens in other companies, except by being an arm of the church there are no government protections for employees:
4. How did the plan become underfunded?Shrimp finds it interesting that a church employer's promise to set aside money today for its employees future benefit -- that's what a pension is supposed to be, no? -- is not a "required contribution." Sure, it's an all-too-common practice in other enterprises, but we like to imagine that a church agency would treat its employees better than profit-seeking corporations. Perhaps we're just too idealistic on Shellfish.
A. The plan has been underfunded for approximately nine years. Nonetheless, it appeared until recently to have enough funding to provide benefit payments to plan participants for many years. However, all of that changed as a result of the dramatic downturn in the financial markets in 2008 and early 2009. The continued payment of plan benefits during the downturn compromised the opportunity for the plan assets to regain sufficient ground to sustain the plan during the ensuing market recovery. Other factors that contributed to the underfunding include lower interest rates and adjustments to mortality tables.
14. Did Augsburg Fortress make all the required contributions to the plan?
A. There are no required plan contributions. The plan states that Augsburg Fortress "shall make such contributions to the Fund from time to time, as it considers advisable." Nonetheless, Augsburg Fortress made contributions to the plan in every year when Augsburg Fortress did not have an operating loss, and even in many years in which it did have an operating loss. For example, this year, Augsburg Fortress made a $900,000 plan contribution despite expected operating losses.
Read the entire report here, including CEO Beth Lewis's entire letter to Augsburg Fortress employees with its included Q&A.
And lest you think we're gloating, no, we're not. Shrimp's library is filled with books and materials from Augsburg Fortress and its predecessors, Fortress Press, Augsburg Publishing House, Wartburg Press, Muhlenberg Press, Augustana Book Concern, etc. The continuing collapse of Augsburg Fortress is a great sadness to those who appreciate the nearly two centuries of Lutheran church publishing houses providing resources for pastors, Sunday Schools (for children and adults), and all those who have sought to teach and express Lutheranism in this un-Lutheran land of North America.
Shrimp out.
