collage of praying saint statue Considering the number of people nationwide who couldbe affected by the outcome of such suits, this is one Hail Marypass that, if it succeeds, could bring respite to a lot of workers.(Photo: Shutterstock)

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Faith may be a powerful force, but it's not paying the bills forCatholic hospital workers who have been told that their pensions are gone.

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NPR reports that workers at St. Clare's Hospital in Schenectady,NY, were stunned to be told that its pension fund had collapsed after the hospital, says thereport, had run "into financial problems and in 2008 it was foldedinto a larger hospital system."

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After initially being told that there was nothing to worry aboutconcerning their pensions, more than 600 workers now findthemselves cut adrift just when they need the money most. Someolder workers were offered reduced pensions, but for the 600+workers at the heart of the issue, there's nothing on offer.

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And the AARP Foundation has filed a lawsuit against the RomanCatholic Diocese of Albany and the pension fund's board of trusteeson behalf of the workers.

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Many religious groups are taking advantage of a loophole in thelaws that protect pensions but allow religious organizations to optout. They can avoid paying into the government insurance programthat protects workers' pensions in the event the organization runsinto trouble—and that's just what St. Clare's did.

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Not only did it not pay into the insurance program, says thereport, it also chose not to comply with "other federal rules aimedat making sure pensions are adequately funded and insured."

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The report quotes Dara Smith, an attorney with the AARPFoundation, saying, "It's incredibly devastating. These folks wererelying on this money for their retirements. For some of them, itwas all of the money that they were expecting for their retirement,and they were promised it over and over."

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Smith also points out in the report that a 2017 Supreme Court decision made it easier forreligious groups to opt out.

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According to the report, "The legal team that argued that caseestimated that about 1 million people have pensions from religiousorganizations that have opted out of the federal guaranteeprogram."

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And while Smith says it's difficult to say with certainty howmany of those plans are in trouble—since some "church plans" do getinsurance from other sources—there are other lawsuits pendingagainst pension funds that have no such coverage. Smith identifiedRhode Island, New Jersey, Minnesota and Puerto Rico as sites ofsuch litigation.

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According to the AARP suit, St. Clare's may have had anexemption from paying into the guarantee program, but since it hasfailed to provide pensions to workers, it has violated statelaw.

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Smith says in the report that even if religious groups takeadvantage of exemptions, they can't just abandon the people whowork for them. She's quoted saying, "This is really a new wave oflawsuits finding a way to make sure that they can be heldaccountable."

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According to NPR, the Diocese of Albany "declined to beinterviewed because of the litigation. It said in a statement thatit knows people are suffering but that the diocese 'never managedthe St. Clare's pension fund. St. Clare's is a separatecorporation.'"

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However, Victoria Esposito, a legal aid attorney working withAARP on the St. Clare's case, says in the report that the RomanCatholic Diocese of Albany "is responsible for making these peoplewhole and paying their pensions."

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Esposito adds, "This hospital was run by the Catholic Church,more specifically the Diocese of Albany, and the Diocese of Albanyis responsible for making these people whole and paying theirpensions."

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Since the diocese itself isn't bankrupt, despite payouts overchurch sex abuse scandals, the hospital workers' lawyers arehopeful that the suit will succeed in resurrecting workers'pensions.

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Considering the number of people nationwide who could beaffected by the outcome of such suits, this is one Hail Mary passthat, if it succeeds, could bring respite to a lot of workers bymaking sure they get what they were promised.

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.