Sharing the Light

Sharing the Light

Frequently Asked Questions about the Priests' Pension Plan

FAQ about Priests' Pension Plan

Please note: This document was published in September 2013. Financial figures in Questions 7-10 have been updated to reflect more current data for the end of the 2013-14 fiscal year.

  1. When do priests retire? How do they qualify for retirement benefits from the Detroit Archdiocese?
  2. How many diocesan priests are retired? How many are receiving pensions?
  3. What do senior priests do in their retirement years?
  4. What retirement benefits do senior priests receive through the Priests’ Pension Plan?
  5. Does the Priests’ Pension Plan cover all of the living costs incurred by senior priests?
  6. What happens if a senior priest requires care at an assisted living facility?
  7. How are priest retirement benefits funded in the Detroit Archdiocese?
  8. Is the Priests’ Pension Plan sufficient to cover pension and retirement benefits for all priests, including today’s younger priests?
  9. How has the Priests’ Pension Plan investment portfolio performed in recent years?
  10. What is the financial status of the assets of the Archdiocese of Detroit’s Priests’ Pension Plan? Is it stable?
  11. Has the Detroit priest retirement plan changed in recent years?
  12. Are Priests’ Pension Plan funds used for other purposes? Are the Pension Plan monies invested with other archdiocesan monies?
  13. How are priest benefits determined and how is the Priests’ Pension Plan administered? Who oversees Plan monies?
  14. Have priests in the Detroit Archdiocese always received their retirement benefits?
  15. Do priests receive benefits through the special collection for retired religious?
  16. If priests leave ministry or are removed because of financial irregularities, sexual misconduct, or other causes, do they receive archdiocesan priest benefits?

1. When do priests retire? How do they qualify for retirement benefits from the Detroit Archdiocese?

In the Archdiocese of Detroit, priests become eligible for and participate in the Priests’ Pension Plan. Archdiocesan priests can conclude their pastoral administrative responsibilities at age 70. The actual date of this change of status is determined in consultation with the Archbishop at the beginning of the calendar year in which they celebrate their 70th birthday. Requests for senior priest status are ordinarily accepted since it is the judgment and experience of the Presbyteral Council and bishops of the Detroit Archdiocese that the demands of a pastorate in the contemporary Church and society require a great deal of energy.  When priests are healthy and wish to continue active administrative responsibilities, the Archbishop considers such requests on an individual basis.

According to canon law (Canon 538.3) pastors are not required to submit their resignation until the age of 75. The Archbishop respects the provisions of the law in those cases in which pastors choose to continue in their ministry as pastor until 75 years of age.  If the good of souls or the need or advantage of the Church requires it, the Archbishop may transfer a priest to another office in accordance with the Code of Canon Law.

In the event of health problems or permanent disability requiring retirement, priests may request senior priest status at age 65. These requests are considered individually and if granted, benefits are adjusted according to years of service.

2. How many diocesan priests are retired? How many are receiving pensions?

As of June 30, 2013 there were 254 active priests in the Detroit Archdiocese including those on a leave of absence or sabbatical; 153 priests were receiving a pension from the Archdiocese.

A large number of priests are retiring, or are preparing to retire. In the next 10 years, 97 more priests are expected to reach senior status. The average age of active priests in the Detroit Archdiocese is 56, and many were members of sizable ordination classes.

3. What do senior priests do in their retirement years?

The ordained priesthood is a way of life of prayer and service from which a priest does not retire in the usual sense. Although a priest may retire from administrative duties and from the demands of a full-time assignment, such as a parish pastor or administrator, he continues the lifelong priestly ministry to which he dedicated himself at ordination. For this reason, a man in this status is referred to as a senior priest. As of June 30, 2013, 39 pastors in the Detroit Archdiocese were over 70 years of age.

Senior priests retain the faculties of the Archdiocese of Detroit, living a priestly life and carrying out priestly functions according to their health and desires. When a priest reaches senior priest status, he may choose to live where he wishes.

Archdiocesan policies regarding priestly retirement are oriented not as a means of transitioning away from ministry, rather to facilitate continuing service by and for priests in their later years, taking into account their needs and those of the Church. The faithful throughout the Archdiocese benefit greatly from the presence and service of senior priests, especially from the wisdom of their experience.

To maximize flexibility and to provide for their needs, provisions are made for senior priests in the Detroit Archdiocese who meet the criteria for retirement benefits:

  • The senior priest is released from the obligations of an assignment.
  • The Archdiocese of Detroit’s Office for Clergy and Consecrated Life assists senior priests in transitions from administrative responsibilities while continuing to exercise ministry as they desire and are able.
  • The Office for Clergy and Consecrated Life also assists senior priests to arrange residence in parish rectories if they desire. The archdiocese collaborates with the Felician Sisters who operate Senior Clergy Village, an independent living facility near Madonna University in Livonia, where several archdiocesan senior priests reside.
  • Monthly financial support is provided for senior priests from the archdiocesan Priests’ Pension Plan as well as a supplemental quarterly expense allowance of $455 to senior priests in good standing.

4. What retirement benefits do senior priests receive through the Priests’ Pension Plan?

At age 70 with 20 years of service, priests in the Detroit Archdiocese receive a full retirement package including a monthly cash distribution of up to $1,500 and a supplemental quarterly expense allowance of up to $455 as well as medical and dental insurance, Medicare Part B costs, auto insurance, and reimbursement of up to $1,500 per year for educational expenses. Senior priests use this money for basic needs such as food, housing, and transportation. The Plan is not an endowment; rather it supports a defined benefit plan.

Retired priests with an interest in furthering their education through classes or symposia at Sacred Heart Major Seminary in Detroit or elsewhere have, through their lifetime of priestly service in the Detroit Archdiocese, earned the privilege of expanding their knowledge, theologically or otherwise. While this is a retirement benefit that not all qualified priests avail themselves of, it is an option that most value.

Regarding auto insurance, archdiocesan priests provide a lifetime of labor in Christ's name and in service to countless parishioners in countless ways and places over countless hours. In circumstances where a senior priest has a vehicle, the Priests’ Pension Plan covers his auto insurance. Retirement for a priest in the Archdiocese of Detroit rarely involves a complete withdrawal from sacramental or other responsibilities. Many priests continue to celebrate Mass and engage in other sacramental life when and where needed. By providing vehicle insurance, the Priests' Pension Plan helps facilitate their ongoing assistance in ministry. Senior priests can be reimbursed for out of pocket expenses such as travel involved in providing ministerial services at parishes other than where they reside.

A priest of the Detroit Archdiocese assigned to fulltime service with an institution that has a retirement plan from which the priest will receive a pension (such as a military chaplain), is eligible to receive financial support from the archdiocesan Priests’ Pension Plan to the extent that the pension from the outside institution is less than the amount he would receive from the archdiocesan plan had he remained in full-time service to the Archdiocese. The same applies to disability benefits earned through institutions outside the Detroit Archdiocese. Retirement and disability benefits through the archdiocesan Priests’ Pension Plan are adjusted based on benefits received from other institutions.

5. Does the Priests’ Pension Plan cover all of the living costs incurred by senior priests?

The archdiocesan Priests' Pension Plan covers many, but not all of the living costs incurred by its senior priests. The archdiocesan Plan helps provide for the basic living expenses of senior priests. Priests in the Detroit Archdiocese are encouraged to ensure they are properly enrolled in Social Security and urged to regularly set aside some of their income for personal retirement savings in individual retirement accounts (IRAs), annuities, or other financial vehicles for retirement. Priests are also strongly encouraged to periodically discuss their finances with qualified, licensed financial advisors.

Senior priests experiencing financial difficulties because of health care expenses can apply to the archdiocesan Vicar for Clergy for expenses incurred beyond those covered by insurance such as for dental treatments, hearing aids, and counseling. Funds used for these purposes do not come from the Priests' Pension Plan but from other archdiocesan resources including the Clergy Health Fund.

6. What happens if a senior priest requires care at an assisted living facility?

Senior priests generally make their arrangements for convalescent care when needed, including coordinating Medicare and Medicaid benefits. When a senior priest is unable to make assisted living or convalescent care arrangements, family members are expected to initiate proceedings. When family involvement is not an option, the Archdiocese arranges long term care. As much as is practical, that sequence is followed- priest, family, Archdiocese- to facilitate the best care for the priest while respecting the priest's wishes and family relationships.

7. How are priest retirement benefits funded in the Detroit Archdiocese?

Catholics in the Archdiocese of Detroit support retired diocesan priests through allocations from parish operating budgets, an annual special collection, and gifts designated to the Priests’ Pension Plan. Investments of Plan funds grow in years when the markets perform well. The Plan fund is reduced when the market declines.

Since 1994, parishes have been assessed an annual amount to support the Priests’ Pension Plan, which is currently $15,644 per priest serving the parish. In this manner, every parish has a role and responsibility in supporting the retirement of the priests who minister to the parish faithful. Other institutions in the Detroit Archdiocese benefitting from the services of archdiocesan priests such as Sacred Heart Major Seminary and archdiocesan Central Services are assessed in a similar manner for each priest assigned a substantial amount of his time in ministry.

Since September 2006, every parish in the Archdiocese of Detroit can take up an annual special collection to help pay its $15,644 per priest assess­ment. This special collection, With Thanks for Their Service in Christ, is held in the third weekend of Septem­ber.

During the fiscal year ending June 30, 2014, the Plan assessed parishes and institutions which have archdiocesan priests assigned to them $3,842,990.

8. Is the Priests’ Pension Plan sufficient to cover pension and retirement benefits for all priests, including today’s younger priests?

The Plan’s actuarial consultants, Gabriel Roeder Smith & Company, annually analyze the Plan, its assumptions, and report its findings to the Plan’s Board. The firm also calculates amounts which should be contributed to the Plan through the parish per-priest assessments, also factoring in investment market activity, as well as benefactor gifts to the Plan fund. The calculation includes amounts to further reduce the underfunded portion of the Plan.

The present value of the accrued benefits to be paid out of the Plan is $66,438,163. As of June 30, 2014 there is $60,659,843 in net assets available to cover the total benefit obligation of the Plan. This means the Plan is 91 percent toward being fully funded, the highest percentage since the Plan was incorporated in 1994. The unfunded amount of $5,778,320 will be amortized and paid into the plan over the next 30 years. Amortization in this context is similar to a homeowner paying more than the required amount on a mortgage to reduce the amount owed over the long term.

Full funding includes the monthly pension payment, the supplemental quarterly expense allowance, as well as health, dental, transportation, education, and other benefits, which add up to a significant portion of the Plan’s costs. When referencing full funding, most pension plans focus on cash payments and do not include benefits in their calculations.

9. How has the Priests’ Pension Plan investment portfolio performed in recent years?

In March 2007 at the request of Detroit Archdiocese priests, and upon consultation with the archdiocesan Presbyteral Council, Priests’ Pension Plan funds were separated from the archdiocesan Loan Deposit Program. In the fiscal year that ended June 30, 2014, the market value of plan investments increased by $7,189,154 from the previous fiscal year and the Plan paid out $4,239,204 to participants.

Fiscal Year Ending Earnings/ (Loss) Percent Gain / (Loss)
June 30, 2009 ($5,369,185) (13.01%)
June 30, 2010 $4,131,123 11.59%
June 30, 2011 $7,906,738 19.65%
June 30, 2012 $732,099 1.67%
June 30, 2013 $6,460,170 14.10%
June 30, 2014 $7,239,064 13.90%

The Plan is audited annually by Plante Moran and for the 2013-2014 fiscal year, the Plan’s financial statements received the highest opinion of assurance.

10. What is the financial status of the assets of the Archdiocese of Detroit’s Priests’ Pension Plan? Is it stable?

The Plan is stable and continues to provide retirement benefits to senior archdiocesan priests. As of June 30, 2014, the Pension Plan had total assets of $60,659,843 which included $56,644,101 in funds invested in the market, $3,698,833 in cash, $282,366 in prepaid expenses, and $127,524 in parish net assessments owed to the Plan.

As is the case with many, if not most public and private sector pension plans, the archdiocesan Priests’ Pension Plan is not yet fully funded for pension and other benefits. The reasons for this include senior priests are living longer and receiving benefits from the Priests’ Pension Plan for greater periods of time than their predecessors. Also, in recent years, health care costs have risen steadily and in some areas precipitously.

The Detroit Archdiocese understands the need to fully fund health care benefits for retired priests now and in years to come, especially with many parishes relying on the ser­vices of healthy senior priests.

11. Has the Detroit priest retirement plan changed in recent years?

Since its inception nearly 45 years ago, the Archdiocese of Detroit has utilized various funding sources for the Priests’ Pension Plan and its predecessor benefit funds for retired archdiocesan priests.

Effective July 1, 1984, the Archdiocese of Detroit implemented a defined benefit pension plan covering all ordained archdiocesan priests. A retirement program for archdiocesan priests existed prior to July 1, 1984; however, no formal plan description existed and contributions to and benefits from the Plan were not based on actuarially computed information. Actuarial calculations of the present value of accrued benefits and the amount of the annual contribution to the Plan, among others, were performed for the first time as of June 30, 1984.

From its inception until 1994, gifts to the annual Catholic Services Appeal funded the Priests’ Pension Plan. Some funds raised through the 1993-95 Stewards for Tomorrow capital campaign also contributed to the Plan. In 1994 these sources of funding changed to a parish assessment-based system through which $15,644 is currently allocated annually for each priest serving a parish.

In September 2006, an annual special collection was approved to help each parish with its per-priest assess­ment and enable parishioners to directly participate in strengthening the Priests’ Pension Plan. This special collection, With Thanks for Their Service in Christ, is held annually in the third weekend of September.

12. Are Priests’ Pension Plan funds used for other purposes? Are the Pension Plan monies invested with other archdiocesan monies?

Priests’ Pension Plan funds are used solely to provide benefits for retired priests of the Detroit Archdiocese and to administer the Plan. Effective March 1, 2007, Priests’ Pension Plan funds were separated from the Loan Deposit Program. Prior to that time, Priests’ Pension Plan funds were invested in the Archdiocese of Detroit’s Loan Deposit Program (LDP) and earned a standard interest rate that applied to all funds in the LDP.

Plan assets, separately accounted from other finances of the Detroit Archdiocese, are invested to obtain a market rate of return. These assets are subject to market activity and, while taking on the risk of loss of principle, can accrue the rewards of being an invested fund. All Plan assets must be used for the sole purpose of providing benefits to the priests of the Archdiocese of Detroit and to administer the Plan.

13. How are priest benefits determined and how is the Priests’ Pension Plan administered? Who oversees Plan monies?

The Archbishop of Detroit, with the consultation and advice of the archdiocesan Presbyteral Council and the Priests’ Pension Plan Board, has ownership and oversight of the Priests' Pension Plan for the benefit of all priests incardinated in the Archdiocese of Detroit.

The Priests’ Pension Plan Board is responsible for the general administration, management, and operation of the Plan. The Plan’s Board is comprised of the Archbishop, six priests elected by the priests of the Archdiocese, four lay members appointed by the Archbishop, and ex-officio members including the Vicar for Clergy and Consecrated Life, Moderator of the Curia, and the Central Services Director of Finance and Administration. Any incardinated archdiocesan priest in good standing is eligible for election to the Priest’s Pension Plan Board.

Oversight of the Plan’s invested funds is the responsibility of the Archdiocese of Detroit’s Finance Council which monitors the performance of fund managers hired to invest Plan funds. Fund managers are regularly evaluated against benchmarks to ensure proper investing of the funds and successful rates of returns. The Priests’ Pension Plan Board receives a summary of fund activities, although its main responsibility is to review and set policies for the use of fund monies.

Plan contributions are made in accordance with recommendations of independent actuary consultants, and modified as necessary.

14. Have priests in the Detroit Archdiocese always received their retirement benefits?

Yes. Every priest has received all of his earned and vested pension benefits through the Priests’ Pension Plan. No priest has ever come forward to claim he has not received the full amount of plan benefits to which he is entitled.

15. Do priests receive benefits through the special collection for retired religious?

The Archdiocese of Detroit’s Priests' Pension Plan solely supports senior priests in the Archdiocese of Detroit and is different from the Retirement Fund for Religious, a national program supporting retired men and women of religious orders. The Priests’ Pension Plan is supported by a special annual collection, With Thanks for Their Service in Christ, held on the third weekend in September. Rather than participate in the special collection, most parishes pay the per-priest pension assessment from their operating budgets. Parishioners in the Detroit Archdiocese also have the opportunity to contribute to the Retirement Fund for Religious through a different annual collection conducted the second weekend in December.

16. If priests leave ministry or are removed because of financial irregularities, sexual misconduct, or other causes, do they receive archdiocesan priest benefits?

Priests accrue eligibility toward Plan payments and benefits unless they are determined to be no longer in good standing. A leave of absence resulting from allegations of sexual abuse or similar misconduct initially deemed by the Archdiocese to be supported by credible evidence is considered a break in continuous service. Priests’ Pension Plan participants cannot accrue years of service or credited service when they are on leave for such reasons. If such allegations are subsequently determined to be without basis, the years of service are reinstated.

Participants who choose to leave active priestly ministry are considered to have a break in continuous service. If the former Plan participant had completed the requirements for retirement benefits, he is eligible only for the monthly cash retirement benefit, and not entitled to the other benefits provided for under the Plan.