Former Top Church Official Accuses Archdiocese Of 'Coercion'

Almost 10,000 people in the Boston area are getting, or will get, their pension from the Boston Archdiocese. They're church janitors, teachers in parochial schools and other lay employees. Among them is David Smith, who is pressuring the church to keep its pension promises.

"This is a moral obligation of the Catholic Church in Boston," Smith said.

Smith was chancellor for the church from 2001 to 2006, the top financial official. Now the Archdiocese is giving him and retirees two options: Either accept a one-time payout of 83 cents on their pension dollar or monthly payments.

The problem, Smith said, is that the church told him and others it couldn't guarantee there would be enough money to pay them in the future. Smith met with a group of former employees at a hotel outside Boston and talked about how the church has presented the offer.

"If this isn’t the most intimating presentation I’ve ever been to I don’t know what is," Smith said. "They are saying, 'gee the sky is falling! The sky is falling, people are dying later, investments, we don’t know how it’s going to turn out.'"

The Archdiocese said it is freezing its pension plan because it is now only 83 percent funded as a result of the economic downturn. They are trying to stabilize it by paying out benefits now and then moving employees to defined contribution plans similar to 401(k)s.

Archdiocese spokesman Terry Donilon said they are not pressuring retirees into any option. He said the selection of a lump sum or a monthly payment is voluntary.

"What we are doing is a very responsible, transparent and fair way to trying to protect the beneficiaries," Donilon said.

Tax experts say retirees who cash out will be accepting less than what they are owed, because they are withdrawing early and they are absorbing the losses of the pension plan. They could also be hit with a large tax bill.

The Archdiocese said that when Smith was running the finances of the church, he advocated for similar radical changes to the pension fund.

"It’s hypocritical that he would be attacking the Archdiocese. When he left we were running annual deficits and today we have a balanced budget — we are working within our means," Donilon said. "I don’t think he wants to get into a back and forth over how we are trying to deal with this situation."

Smith said he's not a hypocrite. He said he's working to protect the pensions of people who worked for the Archdiocese.

"When you lay out the facts that show the diocese is using coercion and deceitful practices to try and shift the cost of their pension obligations to the employees who worked their lives forever there. I didn’t expect they would nominate me for sainthood," Smith said.

Smith said because the pension fund is run by trustees who are either employees of the church or have business dealings with the church, the state should step in and appoint an outside overseer. The offices of the Attorney General and Secretary of State say the have received his request and would not comment further.

Eighteen-hundred former employees are eligible for the payout now and have until the end of April to make a decision.