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Church Abandons Pensions For 401(k) with Holy Match

Even the Catholic Church has lost faith in pensions. The Boston Archdiocese is replacing its longstanding defined-benefit plans with a 401(k) for its 3,000 lay workers – offering a 2% match, according to The Boston Pilot.

The church is hardly alone in making this switch. According to the latest figures from the Bureau of Labor Statistics, just 30% of American workers still have access to pensions, with most relying on defined-contribution plans such as a 401(k).  Of those eligible for pensions, 92 percent of employees participate, compared to a 69% participation rate among employees eligible for a 401(k).

Although clergy members are still entitled to a separate pension, they too can participate in the new option, but without the match from the church, archdiocese officials say. As with many such plans in the private sector, only vested employees with five years of service will be eligible.

Administered by TIAA-CREF, the plan offers a selection of 27 different funds, such as the “Ave Maria Catholic Values Fund,” which invests in companies “that do not violate core teachings of the Roman Catholic Church.” The fund has had an annualized return of 6.03% over the past decade.


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About Encore

  • Encore examines the changing nature of retirement, from new rules and guidelines for financial security to the shifting identities and priorities of today’s retirees. The blog also explores news that affects retirement, from the Wall Street Journal Digital Network and around the web. Lead bloggers are reporter Catey Hill and senior editor Jeremy Olshan. Other contributors include The Wall Street Journal’s retirement columnists Glenn Ruffenach and Anne Tergesen; the Director for the Center for Retirement Research at Boston College, Alicia Munnell; and the Director of Research for Pinnacle Advisory Group, Michael Kitces, CFP.