Failed Pension Funds Leave Catholic Hospital Workers Struggling For Answers The AARP has filed a lawsuit on behalf of workers at a defunct Catholic hospital in upstate New York, saying hundreds lost their pensions unfairly. And there are similar cases around the country.

'Why Is There Nothing Left?' Pension Funds Failing At Catholic Hospitals

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NOEL KING, HOST:

In upstate New York, hundreds of former employees of a Catholic hospital have lost their pensions after their pension fund collapsed. Now, their situation illustrates a problem that is pretty widespread. Many religious organizations are not covered by a federal program that protects most other employees' pensions. NPR's Chris Arnold brought us this report.

CHRIS ARNOLD, BYLINE: The people who worked at St. Clare's Hospital in Schenectady, N.Y., say it was like being part of a big family - for some, especially.

KAREN BRADLEY: My dad worked there as a pharmacist when I was a young kid. And I, you know, I remember I was always there, it seemed like, always part of that community of people.

ARNOLD: Karen Bradley followed her dad's lead and worked at the hospital for 24 years. She's a nurse. She's 56 now. Bradley says the pay wasn't great at St. Clare's, but it was a good hospital.

BRADLEY: I enjoyed what I did there and believed in the promises that were made about the pension.

ARNOLD: But the hospital, which was founded by the Catholic Church, ran into financial problems. And in 2008, it was folded into a larger hospital system. Workers were told, though, at that time that the pension would still be there for them. But then a year ago, they got letters in the mail. Bradley was told, essentially, her 24 years at the hospital didn't matter. Her pension was gone. She stands to get nothing.

BRADLEY: Why is there nothing left? Who screwed up? You know, who did what to who? And how come this happened? And who's accountable?

ARNOLD: The AARP Foundation is asking the same questions. It's suing the Catholic Diocese of Albany on behalf of the workers. The lawsuit says more than 600 people lost their entire pensions. Bradley says her husband has some retirement savings, but the couple's not sure that it's going to be enough.

BRADLEY: We have a daughter who has special needs, so we have to worry about her future, too.

ARNOLD: Now, most people in the U.S. do not have pensions, but those that do - the vast majority are protected by a government insurance program. Employers with pensions have to pay into it. But religious organizations, such as Catholic hospitals, they can opt out and both avoid that expense and the cost of complying with other federal pension rules. That's what the people managing St. Clare's Hospital did. So there is no guarantee, and many workers really are left with nothing.

Dara Smith is an attorney with the AARP Foundation.

DARA SMITH: It's incredibly devastating. I mean, these folks were relying on this money for their retirement, and they were promised it over and over.

ARNOLD: And there are about 1 million people with pensions from religious organizations that have no federal backstop. That's an estimate from lawyers in a related case. That's not to say that all those pension plans are in trouble, but some are.

And there is a growing number of lawsuits. The St. Clare's case argues that even though the hospital had an exemption from the federal rules, it still violated state law by failing to provide the pensions that were promised, so, Dara Smith says, religious groups can't just abandon their workers.

SMITH: This is really a new wave of lawsuits finding a way to make sure that they can be held accountable.

ARNOLD: Sixty-nine-year-old Mary Hartshorne is also affected. She worked in radiology at the hospital. And she's actually had to sell her house because of this pension debacle. And it's still pretty hard for her to talk about it.

MARY HARTSHORNE: That house was going to be the place I retired. It was just a little house, but it sat on a little lake, and it was so pretty and peaceful. And it just wasn't - it wasn't going to work out. I knew it wasn't. And I'm OK. I'm going to - you know, you get through it, but it does take its toll on your heart and soul.

ARNOLD: And, actually, Hartshorne says she's better off than most. She's in a smaller class of older workers who were offered 70% of their pensions going forward. But she says she couldn't trust that the money would be there, so she took a lump-sum payout instead, which she says wasn't very much money.

For its part, the diocese declined an interview due to the litigation but said in a statement that it knows that people are suffering but that the diocese, quote, "never managed the St. Clare's pension fund. St. Clare's is a separate corporation," end quote.

Victoria Esposito is a local legal aid attorney working with the AARP on the case. She says it's not true that the diocese has no responsibility.

VICTORIA ESPOSITO: This hospital was run by the Catholic Church, more specifically the Diocese of Albany. And the Diocese of Albany is responsible for making these people whole and paying their pensions.

ARNOLD: Like many dioceses, Albany is facing costs related to the church sex abuse scandal. But the lawyers for the workers say the diocese is not bankrupt. There is money there. So Esposito hopes the lawsuit can succeed so the people who worked at St. Clare's Hospital can get their pensions back.

Chris Arnold, NPR News.

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