Bold claim: Catholic Dioceses and Schools face a staggering $800 million pension shortfall that could reshape how they fund retirements. And this is where the controversy deepens: why are long-standing institutions suddenly asking for much larger contributions, and who bears the risk?
Catholic dioceses and numerous Catholic employers are grappling with a sizable underfunding gap in a pension plan managed by Christian Brothers Services, a nonprofit linked to the De La Salle Christian Brothers. The shortfall affects thousands of current workers and retirees, forcing institutions to consider drastic funding increases that many say they simply cannot absorb.
The organization at the center, Christian Brothers Services, has requested substantial boosts in employer contributions to close the gap. Some schools and dioceses have described the proposed increases as financially untenable. For example, the Diocese of New Ulm in Minnesota stated on Nov. 12 that the diocese would be asked to contribute more than $2 million per year for the next 25 years—a level deemed infeasible.
Christian Brothers Services, based in Romeoville, Illinois, describes its work as providing retirement services for about 40,000 employees. The underfunding touches more than 180 member organizations, according to a memo from the Diocese of St. Cloud, Minnesota, a client of the firm.
Local voices express concern. Bishop Chad Zielinski of New Ulm underscored the gravity of the situation, noting the dedication of the people affected and pledging efforts to reach a responsible resolution.
As of July 1, 2025, the firm reported an $800 million shortfall: assets of about $1.55 billion versus total pension liabilities of about $2.35 billion. The company attributes the deficit to shifts in the financial landscape and a rising retiree-to-active-employee ratio. With funding at roughly 66% of projected obligations—below the commonly cited 80% benchmark—experts disagree on what constitutes a healthy level for long-term pension health.
Sam Hartmann, a partner at Quantum Pensions Solutions, has advised more than a dozen Catholic schools with ties to Christian Brothers Services. He notes that the funding gap stems from demographic trends—more retirees drawing benefits than active contributors—an issue he says predates the present crunch. Some schools he advises face two-to-threefold increases in required contributions over the next 25 years to cover unfunded liabilities, with one case showing a 178% jump this year and a cumulative 250% rise by July 1, 2028.
This leaves schools with limited options: inject far more money in hopes of strong investment returns, or consider reducing future retiree benefits. In a few instances, schools have spun off their own pension plans or are exploring the possibility, though such moves are complex and not universally embraced.
Background matters. Christian Brothers Services began in 1960, formed by a De La Salle Christian Brother, and has long provided pension plans, as well as health, risk management, and advisory services. Prior to the 2008 financial crisis, the plan was fully funded or better, even increasing retiree payments during good times. However, the market downturn, coupled with rising benefits and later high volatility, contributed to the current funding challenges. The firm has also faced losses tied to a 2020 investment dispute with Allianz Global Investors; a subsequent settlement terms were not disclosed.
A July 2024 actuarial assessment shows about 40,072 total participants: 15,111 active employees, 7,717 separated or disabled, and 17,244 retirees or beneficiaries. Active participants represent roughly 38% of the plan, while projected benefits for current workers account for about 27% of the plan’s total liabilities. This means the plan relies heavily on investments and future contributions from non-active participants.
Saint Mary’s University of Minnesota, among the affected members, received formal notices in July and has since engaged in ongoing discussions and information sessions through mid-August. The university, affiliated with the De La Salle Brothers, is evaluating three main options: stay with Christian Brothers Services and face higher contributions; withdraw with a substantial exit fee; or spin off an independently run pension plan. A decision is not expected until midwinter or spring, with a May 2026 deadline in sight.
Lewis University, another De La Salle institution near Chicago, is navigating a similar path and has brought in outside consultants. In both cases, stakeholders have organized Q&A sessions to help staff and faculty understand potential consequences and alternatives.
What protections exist for employees facing pension shortfalls?
Legal expert Norman Stein of Drexel University explains that church pension plans do not enjoy the same federal protections as private, ERISA-covered plans. Religious organizations that sponsor church plans are exempt from ERISA unless they elect to join its protections. This means church pension participants do not have access to the federal Pension Benefit Guaranty Corporation (PBGC) safeguards, which can step in for failures in private plans. In a church plan, any failure to pay promised benefits would primarily be a matter of state law, and remedies can be costly and unpredictable.
In practical terms, this makes pursuing redress more challenging for employees, and even successful lawsuits may not guarantee timely payouts, depending on the sponsor’s resources. Legal avenues exist, but they come with high hurdles and uncertain outcomes.
Bottom line: the current situation demands careful scrutiny of funding strategies, transparency about plan design, and open dialogue among dioceses, schools, employees, and pension boards. With Stay-or-spin-off options on the table, institutions must weigh short-term funding shocks against long-term retirement security for thousands of workers.
If you are a current employee or retiree affected by the Christian Brothers Services pension shortfall, your input matters. Share your experiences and questions with a reporter to help shed light on how these funding decisions impact real people in Catholic communities.
