USCCB - (Office of Media Relations) - Arthur Andersen Finds Improved Religious Retirement Picture, Still a Need for More than Six Billion Dollars

Arthur Andersen Finds Improved Religious Retirement Picture, Still a Need for More than Six Billion Dollars

WASHINGTON (September 7, 2000) -- Arthur Andersen LLP's Eighth Biannual Survey of the retirement needs of members of religious orders in the United States has found in the past two years almost a billion dollar decrease in funds needed to offset the unfunded retirement liability.

Nevertheless, the accounting firm found there still is an unfunded liability of $6.4 billion, according to the report being distributed by the National Religious Retirement Office (NRRO).
v According to Arthur Andersen, the survey indicates that the unfunded past service liability is down from the $7.1 billion and $7.9 billion reported in 1998 and 1996 respectively.

The existence of the more than $6 billion liability is conceivable, the report said, given that in 1999 alone, religious institutes expended nearly $650 million to fund retirement expenses for members over the age of 70. The number of religious men and women over age 70 in the NRRO census for Dec. 31, 1999 totaled 41,315.

Dale Kent, reporting for Arthur Andersen, noted that the calculation of the $6.4 billion was not meant to be a scorecard, but "is intended to measure the significance of the problem (41 percent of retirement needs are not currently funded) and focus the collective efforts on resolution of the shortfall."

Kent cited several reasons for the decrease in unfunded liability. They included an increase in investments designated for retirement which was real and greater than projected; differences in the actual versus expected mortality rates; withdrawals from invested funds smaller than anticipated in the actuarial model; efforts religious institutes are taking themselves to address their needs; and a decrease in the number of religious institutes participating in the survey.

Among reporting groups, Arthur Andersen noted, in 1999 a total of 133 of the 696 reporting institutes were adequately funded compared to only 38 in 1985.

Andersen also reported that the median age of both active and contemplative men religious increased to 62 years; for active women religious it remained at age 69, and contemplative women had a median age of 65.

The weighted average annual maintenance cost calculated for a retired religious male was $23,568 and for a female it was $22,071. These represent increases of five per cent for the men and twelve percent for women over the last two years.

The male religious were reported to have received average annual Social Security benefits of $2,868 and the women $3,537 in 1999. The total average Social Security benefit for all religious reporting was calculated by NRRO at $3,334 which is considerably lower than that of the average U.S. beneficiary who received $9,650 according to U.S. Government statistics. The discrepancy is due to the size of the contributions of FICA taxes. Religious, who were first permitted by law to participate in Social Security in 1972, pay both the employers' and employees' share of the taxes, but since they have a vow of poverty and no personal income, the tax (and ultimately the benefit) is based on the fair market value of certain perquisites, such as room and board, that they receive from the institutes.

The National Religious Retirement Office is located at the headquarters of the National Conference of Catholic Bishops (NCCB), and is sponsored by the NCCB, Leadership Conference of Women Religious (LCWR), Conference of Major Superiors of Men (CMSM) and Council of Major Superiors of Women Religious (CMSWR).

It is responsible for the annual Retirement Fund for Religious Collection, which is taken up in parishes nationwide in December. To date, the appeal has collected $318,427,337 to offset retirement needs of religious and has distributed $309,245,759 to religious orders for the care of their elderly and infirm members. Church officials launched the appeal when it became obvious that funds available to U.S. religious orders for retirement were insufficient. Simultaneously, the religious communities began to cut costs and raise additional monies by selling property, converting structures to maintain them more economically and developing inter-community efforts for cost-efficient care of their elderly members.

Signs of the crisis began to show in the early 1970s as health care costs skyrocketed and demographics of religious orders shifted, leaving more older than younger members. The resulting situation precludes wage earners in religious orders today from being able to support all their retired members.

Editors: Copies of the 1999 Retirement Needs Survey VIII are available upon request from the National Religious Retirement Office, 3211 Fourth St., N.E., Washington, D.C. 20017-1194.