It may take a few years for the dust to settle on the impact that 2025 made on Catholic Church retirement plans.
Without putting too fine a point on it, I am pretty sure that 2025 may be remembered as a significant turning point — the year when church retirement plan sponsors became more acutely aware of evolving risks.
Twin Catalysts: Coincidental Events May Have Plan Sponsors Vulnerable to Potential Liability
In July 2025, a substantial and disheartening blow was dealt to several Minnesota dioceses when they realized their Christian Brothers-administered defined benefit plans (CBERP) were woefully underfunded, requiring swift and tough decisions that would impact thousands of current and previous employees, alike. [1]
Minnesota is not the only state hit by the CBERP underfunding crisis — in fact, far from it. Some 180 plan sponsors throughout the country who utilize the CBERP plan for their employee pension now find themselves seeking to address pensioners' fears (and demands) by identifying and establishing a workable solution. All of this is in the face of a significant challenge to collectively raise approximately $800 million to meet underfunded liabilities.
It is a Herculean task they have before them. Many plan sponsors find themselves scrambling to discern a viable path to deliver the promised benefits to approximately 40,000 individuals, with an estimated 17,000 already in the distribution phase. And, they are doing all of this as they struggle to both advance and communicate progress to both current and future pensioners who are growing restlessly impatient for answers and resolution. Painting the proverbial picture of laying track while the train is already barreling forward.
The Second Shoe Drop for Church Plan Sponsors — A Personal Liability Judgment
Just five short months after the revelation of the CBERP crisis, a judgment of personal liability was levied against Bishop Emeritus of Albany, Edward Scharfenberger for his role as a board member when St. Clare's Hospital's non-ERISA Church plan pension was mismanaged and ultimately terminated. The finding was followed by Bishop Scharfenberger filing for bankruptcy when he learned he owed 10% of the $54.2M judgment — and that was before the punitive phase (which was stayed upon the bankruptcy declaration). [2]
The combination of the CBERP crisis and Bishop Scharfenberger's personal liability finding cannot be dismissed, and they may serve as precedent and provide insight into what could lie ahead for litigation in the non‑ERISA Church plan world.
When taken together, these two events involving non-ERISA Church retirement plans have the potential to set in motion a chain of lawsuits with personal liability claims against persons who act as Church plan sponsors and fiduciaries. There is now precedent cited in support of such personal liability claim.
This new-found reality should trigger serious conversations about how Church retirement plans are implemented and managed.
Plan sponsors may wish to reconsider the mindset that Church plan sponsors can simply shun all things ERISA. It's time to choose instead to adopt standards and plan provisions that at least imbue the spirit of ERISA. Doing so may help align plan governance with the interests of both plan sponsors and participants. Alas, the two are not in conflict with each other, but rather opposite sides of the same coin. Plan sponsors and participants often share aligned interests. This is the aim of ERISA, and now it must not just be an amorphous goal, but an innate directive of Catholic Church plan sponsors. Trust law essentially mirrors ERISA in these areas, and it is the standard often referenced in evaluating governance practices. Let's dig into that and use it as a backbone for thoughtful and well-documented governance practices.
Systematically Breaking Down Five Key Strategies for Implementing a Healthy Church Retirement Plan
In this article series, I will be rolling out a program for Church retirement plans: Five Key Strategies for Implementing a Healthy Retirement Plan. These are simple steps informed by sound and repeatable processes for prudent governance and based upon the principles of ERISA. This series delves into protocols, practices and lessons learned — practices that Investing for Catholics has been implementing with our clients since 2009.
I look forward to sharing this important information with you.
Next in the Series: Strategy One — Develop Strong Plan Fiduciary Governance
About the Author
Mary Brunson – Co-Founder and Senior Vice President, Investing for Catholics
Click here to view Mary's bio and contact information
Disclosure:
This article is provided for informational and educational purposes only and is not intended to constitute legal, tax, ERISA, or investment advice. The discussion of laws, regulations, court decisions, fiduciary standards, and governance practices is general in nature and may not apply to all plans or circumstances. Outcomes and interpretations may vary based on specific facts, plan design, governance practices, and applicable law. No assurance can be given that any approach, strategy, or practice will achieve a specific result or reduce risk. Plan sponsors should consult with qualified legal and tax professionals regarding their specific circumstances.
Investing involves risk, including the possible loss of principal. Past performance is not indicative of future results.
Advisory services are offered through Index Fund Advisors, Inc., a registered investment adviser. Readers should consult their own legal, tax, or financial professionals regarding their specific situation before taking any action. Any services described are offered only pursuant to a written advisory agreement.
References to fiduciary governance practices and liability considerations are discussed in general terms and do not imply that any specific action or strategy will prevent litigation, reduce liability, or produce a particular legal outcome. Nothing herein should be interpreted as a recommendation or determination of fiduciary status.
[1] Matthew McDonald, "Catholic Dioceses and Schools Confront $800 Million Pension Fund Shortfall," National Catholic Register, December 4, 2025, https://www.ncregister.com/news/christian-brothers-services-pension-shortfall.
[2] Matthew McDonald, "In Rare Move, Retired Albany Bishop Files for Personal Bankruptcy After Pension Verdict," National Catholic Register, December 19, 2025, https://www.ncregister.com/news/bishop-scharfenberger-bankruptcy.
About the Author
Mary Brunson - Vice President, Wealth Advisor Investing for Catholics
Mary Brunson is the Co-founder of Investing for Catholics (IFC), a division of Index Fund Advisors, Inc. (IFA). Since 2009, she has focused her advisory efforts on Catholic faith-consistent investing, applying financial science to support fiduciary advice and institutional wealth services aligned with Catholic values. She works closely with religious orders and Catholic organizations—including diocesan plans, endowments, and foundations—as well as public trusts, pension plans, and individuals.
