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AARP Asks U.S. Court of Appeals to Uphold ERISA

AARP filed a friend-of-the-court brief in Kaplan v. St. Peter’s Healthcare System, supporting employees whose benefits will not be protected by ERISA if the court agrees that the retirement plan is covered by an exemption for church plans in the Employee Retirement Income Security Act (ERISA).

Read AARP's Amicus Brief (PDF)


The complaint alleges that Defendants wrongfully claim that their pension plan is exempt from ERISA’s protections because it is a “church plan[s].”  As a result of St. Peter’s claim of  church plan status for its pension plan, the pension plan does not comply with many of the protections afforded to plan participants under ERISA.  

The lawsuit alleges that the church plan exemption was intended to apply only to plans that were established by churches including conventions or associations of churches.

On a motion to dismiss, the district court interpreted the application of ERISA’s church plan exemption differently from the long-standing guidance from the Internal Revenue Service (IRS) and U.S. Department of Labor (DOL) guidance. The court concluded that although ERISA permits church-associated organizations to maintain church plans, it still demands that only a church may establish a church plan. According to the court,  congress intentionally did not use the word “establish” in the provision at issue because establishment by a church had to have been met before the exemption could apply. The court further ruled that it was not obligated to give deference to any IRS or DOL “church plan” ruling previously issued to the underlying defined benefit pension plan. The court stated that ERISA is a remedial statute, so any exemptions should be construed narrowly.
The third circuit granted St. Peter’s request for an interlocutory appeal, to decide whether the district court’s interpretation of ERISA was correct because a decision in favor of the pension plan will end the case.

AARP’s brief, which was joined by the National Employment Lawyers Association, explains to the court all of the protections which employees will lose if the court is to find that ERISA’s church plan exemption applies. These protections include:
funding requirements;  protection against benefit reductions: requirements vesting and benefit accrual standards; PBGC insurance; fiduciary standards to protect plan assets; and disclosure to the employees and oversight agencies.

What’s at Stake

This case is important to people over the age of 50 in particular because if their benefits are reduced or eliminated due to pension underfunding they will only receive benefits until the plan runs out of money. Under ERISA, the Pension Benefit Guaranty Corporation will step in to ensure that participants receive their benefits. Without this protection against reduced or eliminated benefits, participants may not have enough for retirement and may not have enough time to make up the shortfall in benefits.

Case Status

Kaplan v. St. Peter’s Healthcare System is before the U.S. Court of Appeals for the Third Circuit.