Several U.S. dioceses and scores of other Catholic employers have hard choices to make amid an $800 million shortfall in a pension fund, managed by a Catholic financial services firm, for thousands of their employees and retirees.
The firm, Christian Brothers Services, a nonprofit company sponsored by the De La Salle Christian Brothers, has asked its clients to dramatically boost their contributions to the fund to make up the difference — a major added expense some employers say they can’t absorb.
“Christian Brothers Services is requiring the diocese to contribute over $2 million annually for the next 25 years — an amount that is not feasible for the diocese,” the Diocese of New Ulm, Minnesota, said in a statement Nov. 12.
Christian Brothers Services, based in Romeoville, Illinois, provides what it calls “retirement services” for about 40,000 employees, according to the company’s website. The pension shortfall affects “more than 180 member organizations,” according to a memo from the Diocese of St. Cloud, Minnesota, one of the firm’s clients.
New Ulm Bishop Chad Zielinski echoed the grave concerns of other dioceses, Catholic employers, and their current and past employees.
“These dedicated individuals have devoted their lives to serving the Church,” Bishop Zielinski said in the written statement. “We are committed to achieving the best possible resolution in this very serious matter.”
As of July 1, 2025, Christian Brothers Services reported an $800 million gap between assets on hand (about $1.55 billion) and the liability for pension payments (about $2.35 billion), according to a company brochure. The firm blames the shortfall on changes in the financial climate and an increase in the ratio of retirees to active employees. The underfunding means the pension fund has only about 66% of the assets needed to cover projected payments. That’s well below the 80% benchmark often cited as a minimum for a healthy pension fund — a threshold some experts challenge, arguing that 100% or more is a better standard.
Sam Hartmann, a partner of Quantum Pensions Solutions, a Florida-based company, told the Register he is advising more than a dozen Catholic schools that currently have or recently had pension funds managed by Christian Brothers Services. Most of them are in Minnesota, where he is, but others are in the Southeast, Midwest and West Coast.
The demographics problem that Christian Brothers Services cited is real, Hartmann said — the pension plan has far more participants drawing on it or otherwise covered by it than it does active employees contributing to it.
But that ratio isn’t the only problem, he said.
“You can’t just blame it on demographics now, as this issue has not just emerged overnight,” Hartmann said. “There’s been a sustained downward trend in the active participants’ share of the liability.
He said some of the schools he is advising are being asked by Christian Brothers Services to contribute two to three times their current payments over the next 25 years, just to make up the unfunded liability.
One school, he said, is facing a 178% jump in its contribution to the pension fund this year, followed by steady yearly increases through July 1, 2028, when the increase over last year’s pension payments will total 250%.
“We’ve talked to schools where they’re being blindsided by significant contribution increases,” Hartmann said. “That’s not something a lot of these schools are equipped to handle, and so they’re facing some very difficult decisions right now.”
The schools’ options are limited to contributing much more to the pension plan than they do now, hoping for large unanticipated increases in investment returns, or reducing pension benefit payouts to retirees.
He said three of his clients have spun off their own pension plans, and two others are considering doing so — even though that’s not something most schools see themselves as equipped to do.
How Did It Happen?
Christian Brothers Services, founded in 1960 by a De La Salle Christian Brother and headquartered about 30 miles southwest of Chicago, has been providing pension plans for Catholic institutions for more than 60 years. The company also provides health plans, risk management and consulting.
Through 2007, the year before the financial crisis, the firm’s pension plan was more than 100% funded, company officials said in a video released earlier this year. At one point, the plan even increased payments to retirees.
But since then, a gap has developed between assets and liabilities.
“In 2007, the plan was overfunded. We did what most plans in that situation did — we increased benefits. Shortly after that, the market conspired against us,” said David Enenbach, a member of the Employer Retirement Plan Board of Christian Brothers Services, in the company video.
When the value of the Standard & Poor’s 500 stock market index dropped 37% in 2008, it hit the pension fund hard.
“That took our funded status from over a hundred, combined with an increase in benefits, to something in the low 70s. We bounced around in the years since then, but have never fully recovered from that setback,” Enenbach said.
Christian Brothers Services has also said that its pension plan lost about $149 million in early 2020 because of what it described as reckless investments by a German investment management firm, Allianz Global Investors, which led the Christian Brothers Employee Retirement Plan to sue Allianz Global in federal court in September 2021. The lawsuit was settled in February 2022 with undisclosed terms, so it is unclear how much of its losses Christian Brothers recouped.
But in a recent statement to the Register, the company didn’t cite the investment losses of five and a half years ago as a factor in the current funding shortfall, instead pointing to the 2008 financial crisis and upside-down demographics, with far fewer active employee contributors to the pension plan than retirees drawing on it.
An actuarial report provided to employers by Christian Brothers Services says that as of July 1, 2024, the pension plan had 15,111 active employees, 7,717 participants separated from the company or disabled, and 17,244 retirees or beneficiaries, for a total of 40,072 participants. That means only about 38% of the plan’s participants are active employees contributing to the fund.
Promised future pension payments to active employees make up only about 27% of the pension fund’s liability — meaning the total value of projected monthly pension payments to all participants during retirement. Employers are currently contributing to the fund only for active employees, based on a percentage of payroll.
Earlier this year, the company informed members with so-called defined benefit plans — which provide a lifetime monthly pension to retirees — that the fund the company manages is not on track to provide the previously projected payments into the future.
Saint Mary’s University of Minnesota, one of the affected clients, says it received a notification on July 3, followed by more detailed information in midsummer and a meeting with Christian Brothers Services in mid-August.
Contacted by the Register recently about the pension fund shortfall, Christian Brothers Services provided a written statement citing what it called “significant headwinds” beyond the company’s control, including “the Great Recession of 2008” and “shifting demographic trends,” and said the firm has kept employers informed about the situation.
“The Pension Board has consistently responded with thoughtful modifications, taking responsible action with both employers and participants in mind,” said Terry Arya, chief marketing officer of Christian Brothers Services, by email, referring to the body that oversees the pension fund the firm manages.
The statement says the significant increases in employer contributions are necessary to meet projected pension liabilities.
“This represents a significant change to the funding levels required for our pension members — however, it is a necessary step to strengthen the financial health of the pension fund and is designed to bring the plan to full funding in 25 years. Christian Brothers Services is committed to working with pension member organizations to work through this transition and identify the pension plan options that best meet their needs moving forward,” the company’s statement says.
Hartmann, a pension risk actuary who is advising some of the affected Catholic schools, told the Register that the Christian Brothers Services pension fund didn’t make much headway in reducing the funding shortfall between July 1, 2022, and July 1, 2024. The fund went from 67% funded to 66% funded during those two years — a period when the value of the Standard & Poor’s 500 stock market index jumped more than 40%.
“It was kind of staggering to see that there was very little progress made in the funded position,” Hartmann said.
Shortfall Coming
The pension funding problem is not immediately affecting retirees at Catholic institutions such as Saint Mary’s University of Minnesota, where officials say no benefits are currently affected. But the long-term outlook is concerning, because the school’s pension plan is only 58% funded.
A 1,500-word document addressing questions about the school’s pension plan that Saint Mary’s provided to the Register outlines three options, none of them ideal. One is to remain in the Christian Brothers Services pension plan, “which requires significantly increased contributions from the school to reduce the underfunding,” the document says. Another is to withdraw from the plan, “which entails a significant fee,” according to the document. A third is to spin off an individual pension plan that the school would operate.
Saint Mary’s University officials say they won’t decide until midwinter or early spring. The deadline for deciding is May 2026, Hartmann told the Register.
“At this time, no decision has been made to reduce benefits, and we do not have plans to cut benefits while our review is underway. We also don’t yet have an independent basis to state whether any group (retirees, terminated-vested, or active employees) is at risk of not receiving full benefits,” the Saint Mary’s document states.
“Before reaching conclusions, we’ve engaged an external firm to assess the plan using primary data (actuarial valuations, plan design provisions, contribution history, and investment performance versus policy benchmarks and peers). Until that analysis is complete, it would be premature to speculate,” the document continues.
Saint Mary’s University of Minnesota is associated with the De La Salle Brothers, as is Lewis University in suburban Chicago, which is encountering a similar problem and has hired a consulting firm to make recommendations. Question-and-answer sessions, both in person and online, have been offered for employees, said Kathrynne Skonicki, executive director for public relations and communications, by email.
What Can Employees Do?
The legal options for employees of Catholic institutions worried about their pensions are limited.
Norman Stein, a law professor at Drexel University who serves as a legal and policy consultant at the Pension Rights Center, explained to the Register that participants in church pension plans, such as the one offered by Christian Brothers, do not have the same kinds of federal protections that private pension plans have.
According to Stein, the only recourse for participants in church pension plans that fail to pay promised benefits is to sue their employer — a diocese or religious organization — under state law.
When Congress passed the Employee Retirement Income Security Act of 1974 (also known as ERISA), an exemption was made for religious organizations, so they are not subject to federal pension laws unless they elect to be covered. That means participants in a church pension fund are not protected by the federal pension insurance program and may see their pension disbursements stopped altogether if the plan is underfunded.
Private pension plans are required to pay premiums to the Pension Benefit Guaranty Corporation (PBGC), which pays benefits when a covered pension plan fails to pay its promised benefits. Religious organizations with church plans do not pay premiums to the PBGC. With private pension plans, the PBGC can take over terminated pension plans when they are underfunded and seek to recover assets from the companies that sponsored them.
The PBGC can also take over as trustee of a private pension plan covered by ERISA and make pension payments directly if the private plan has failed. But pension plans of religious institutions aren’t covered.
“Church plans are not subject to ERISA, which means that there are no funding standards. It means that the plan could cut benefits basically whenever it wants under federal law,” Stein said.
When a church pension plan fails to pay out its promised benefits, the only legal recourse participants might have, he said, would be to sue under state law.
Stein explained that suing a church pension plan — or the diocese or religious organization that sponsors it — under state law is far more difficult than seeking redress against a private pension plan that is covered under ERISA. Some plans, he said, may include a stipulation that the sponsor is not legally liable if the fund is inadequately funded.
Christian Brothers Services did not immediately respond Tuesday to a request by the Register for a copy of a pension plan the company manages.
The costs of waging such a legal challenge would also be prohibitively expensive, he said. And even if the plaintiffs were successful, it would not necessarily result in a payout.
“When you are talking about underfunding that’s this large, even if you could make a case against the appropriate parties, you still have the problem that a judgment is only as good as the resources of the people that you’ve sued and have found liable,” Stein said.
Register Senior Writer Zelda Caldwell contributed to this story.
Are you a current employee or retiree who is directly impacted by the underfunding of the Christian Brothers Services pension? We’d like to hear from you. Contact Staff Writer Matt McDonald at [email protected].