Colin Henty with Arthur J. Gallagher & Co an insurance, risk management and consulting company answers questions along with Bishop Chad Zielinski regarding the New Ulm Diocese retirement plans during a special workshop Tuesday at Church of St. Mary’s. Last year it was announced the New Ulm Diocese’s retirement and pension plan was facing a shortfall.

NEW ULM – Over six months after it was announced that the New Ulm Diocese’s retirement and pension plans for current and former employees were facing a shortfall, employees are starting to hear answers.

The New Ulm Diocese held a series of workshops to explain and answer questions on changes to retirement benefits programs for employees following a separation from the Christian Brothers Employee Retirement Plan (CBERP).

The workshop included representatives from Arthur J. Gallagher & Co, who have provided consulting services for the dioceses and will be administering the new retirement plans.

The workshop held at Church of St. Mary’s in New Ulm on Tuesday was divided into two parts. The first part was retired employees who had questions and concerns about their pensions. The second part was for active employees.

For over 40 years, the Diocese of New Ulm has been enrolled in the CBERP, which is managed by Christian Brothers Services in Romeoville, Illinois. In July, the diocese was informed by the Christian Brothers that their pension plan was significantly underfunded and did not have assets available to meet all long-term obligations. Most of the employees impacted by this shortfall are Catholic School teachers.

Christian Brothers Services managed pensions for 180 dioceses and member organizations, impacting 4,000 people nationwide. The Christian Brothers needed $42 million over the next 25 years to resolve its current cash deficit.

The New Ulm Diocese chose not to remain in CBERP. To remain in the pension plan, the diocese would need to continue its employer contribution in addition to higher payments to cover the shortfall. The diocese would need to contribute over $2 million annually for the next 25 years. The diocese deemed this as unfeasible and chose to separate from CBERP and create the new Diocese of New Ulm Lay Employee Retirement Plan, with the intent of providing a competitive retirement benefit plan for current and future employees.

During Tuesday’s workshop, many of the attendees asked about how the pension collapse happened in the first place and if their was any legal recourse.

Bishop Chad Zielinski said the investment model used by Christian Brothers inverted over time with fewer people paying into the plan in addition to a collapse in investment markets. Christian Brothers’ investment board attempted to recover funds by raising premiums, at which point many of their clients, including the New Ulm Diocese, decided to move their pension fund to a different organization.

Zielinski said lawyers working for the diocese did look into legal recourses, but because the Christian Brothers retirement fund was not covered by federal pension laws, it would be difficult to recoup assets through a lawsuit.

Zielinski said lawsuits against Christian Brothers would likely result in years of litigation and what was left of the pension fund would deplete further, hurting diocese employees more than it would help.

Most of the workshop attendees wanted to know if their monthly pension would continue. The common response from the diocese was that the intention was to continue paying benefits for retirees.

Effective Dec. 31, the Diocese of New Ulm “spun off” from CBERP. Employees of the parishes, schools and the chancery, within the Diocese of New Ulm, ceased benefit accruals under the CBERP. Employees who accrued a benefit under CBERP were moved to the Diocese of New Ulm Lay Employee Retirement Plan.

Through Arthur J. Gallagher & Co, the diocese is working to receive the assets previously contributed to CBERP to help establish the new retirement plan.

The transfer of funds from CBERP will take place in June of this year. The New Ulm Diocese is also collaborating with Gallagher to develop a new retirement plan for current, active, and future employees, which is set to begin on July 1.

During the workshop, several retired employees asked if the new pension plan set up through Gallagher would be similar to the CBERP plan. At this time, New Ulm Diocese intends to keep pension funds at the same level and will mirror the CBERP.

Gallagher representative Colin Henty said very little has changed with the retirement plan except who is managing. Instead of Christian Brothers Plan it is the Diocese of New Ulm Retirement plan.

The team at Gallagher will not receive the assets from the pension plan until June. Retirees receiving benefit payments will continue to receive payments, but in July the source of the payments would change. Henty said there will be a different name at the top of the deposit check starting in July. Those receiving direct deposits would not notice any change.

“We inherited a very difficult pension plan, but the intention is over time to fund it and pay the benefits promised and have been earned,” Henty said.

Later in the year, once the new pension plan is in place, the individual benefit holders will have the option of forgoing monthly payments and take a lump sum payment or continuing with monthly pension payments.

Currently, the pension funds in the Christian Brothers account are frozen and are not earning interest, but once they are transferred in June, it will begin accruing interest again. The New Ulm Diocese will also have direct control of the fund and a say in how it is invested going forward.

Former New Ulm Area Catholic School (NUACS) employees were relieved to finally have information about the retirement plan.

“I was glad they had the meeting,” said Kris Hodapp, who served as a teacher with the New Ulm Diocese for 38 years before retiring in 2017. “This was the first one they had any information for the retired staff.”

Hodapp said it was a relief to hear her pension payments would continue beyond May. She had previously been under the pension that May would be the last month she would receive a full payment, but after the workshop, it was clear funding would continue at least through the summer.

“The lack of information causes anxiety,” Hodapp said. In general, she was concerned that outside of those with retirement plans, few parishioners at the New Ulm Diocese were aware of what was happening, but the workshops were helpful.

“I felt much better after the meeting and I think they are still moving in the correct direction,” Hodapp said.

Lenise Brennan, who taught computer classes for St. Anthony and Cathedral for 18 years before retiring in 2019, said she also felt better after the workshop because it was the most information the diocese had provided on the pension plan.

“I think transparency is very important,” Brennan said. “Keeping us updated is a really positive thing. It is good to let us know our pension is continuing for now.”

Brennan said before the Tuesday meeting, none of the retirees knew when their last pension check would arrive.

“Just having them talk to us added a lot of hope,” she said.

Hodapp said she hoped in the future that the committee formed to handle the pension would include more lay members, possible some current or former teachers, to provide input.

Brennan said she is hopeful the New Ulm Diocese will continue being transparent after Gallagher receives all the pension funds in June. Many of the former and retired teachers are eager to know how the diocese plans to reorganize the pension plan going forward.