April 12, 2012
I am a long-time contributor to UJA. I believe in the “greater Jewish community” and the fact that we all have to pull together. As such, I embrace Jewish values in my philanthropic giving and expect the agencies receiving my contributions to uphold those values as well.
One of those values is the fair treatment of employees including the payment of earned wages. To my mind, a promised pension upon retirement is a part of the compensation package they are justly due.
Therefore, I was shocked to learn that UJC MetroWest is considering a radical change in the status of its pension plan that will eliminate important protections for the staff of nine agencies in MetroWest
I oppose conversion to the “Church Plan,” as it is called. While such a conversion does not eliminate the pension obligation, it removes important protections imposed by government regulations for insuring the pension fund, fully funding these pension obligations, and notification of any changes to the status of the plan to the employees and retirees, as required by the Employment Retirement Income Security Act of 1974 (ERISA).
Upset employees and retirees have asked UJC leadership to maintain the pension funds under ERISA protections. I fully support their request. It is true that I have a stake in this issue since my wife Gayle worked for the JCC for 18 years as an early childhood teacher and as the assistant director of their afterschool program. Gayle, like all employees in the MetroWest network, planned her retirement, in part, based upon the promised pension from UJC. I know that many of her fellow teachers will depend heavily upon these pensions when they retire. These teachers taught our community’s children their colors, numbers, and alphabet; to light Shabbat candles; and encouraged us to bring Jewish values and traditions into our homes. What a cruel irony for these many dedicated employees to be let down by such a drastic and unnecessary shift in pension safeguards.
Employees were told to “trust” the UJC leadership’s pledge that it will uphold promises to fund the pension, while stripping away the obligations to fund it imposed by ERISA guidelines. The purpose of those guidelines is to protect employee pension benefits and to obligate the pension payer to do the right thing. By the UJC opting for the “church plan,” they do not have to fund the pension plan nor do they have to reveal to their employees what the status of the plan is.
Every year, I am asked to make a pledge to the UJA campaign and I am expected to uphold that pledge. I urge UJA contributors to let leadership know that they must support their pledge to their employees as well by maintaining the ERISA protections.
The New Jersey Jewish News invited United Jewish Communities of MetroWest NJ to respond to Mr. Kernkraut’s letter:
In response to Mr. Kernkraut’s letter about the UJC MetroWest NJ Employees’ Pension Plan, we would like to clarify several points. We acknowledge his concerns and those of our employees and retirees.
For many years UJC and its agencies have maintained a defined benefit pension plan at a fully funded or nearly fully funded level for its employees. The combination of the 2008 recession and unsustainable increases in funding requirements imposed by federal law drastically increased our contribution requirements and made it unaffordable for us to continue adding to our employees’ pensions. Therefore, in 2009, we discontinued the accrual of future benefits, but all benefits earned to date remain intact.
We now have requested a ruling from the IRS that would exempt us and our pension plan from the excessive funding mandates of ERISA (i.e., a church plan ruling). In essence, this ruling would allow us to avoid paying almost $200,000 per year in insurance premiums from pension assets to the Pension Benefit Guaranty Corporation (PBGC).
As for the need for federal pension insurance from the PBGC, the risk of our pension plan defaulting on its benefit commitments is infinitesimally small because the combined strength of the nine participating agencies supports the benefits earned to date. Further, the pension trust has $31 million — that can only be used to pay pension benefits and expenses — which is more than sufficient to pay benefits for years to come.
We have been, and will remain, committed to funding our pension plan in a prudent and responsible manner. To that end, we are currently developing a pension funding policy that will serve as a binding commitment among UJC and its agencies to fully fund our pension plan, if the IRS gives us the requested church plan ruling. UJC and its agencies stand united in their commitment to our employees and retirees.
Chair, Salaries and Personnel Practices Committee
Chair, Pension Subcommittee
United Jewish Communities of MetroWest NJ