Clergy and church employees of the African Methodist Episcopal Church, Nashville, Tenn., have secured a $40 million settlement from Newport Group, the third-party administrator of church retirement plans in a complex, long-running lawsuit against multiple defendants that alleged plan mismanagement.
The settlement was announced March 5 in a document filed by attorneys representing the plaintiffs in the U.S. District Court in Jackson, Tenn.
The settlement requires court approval as does a separate settlement for $20 million, announced in December, with five other defendants accused of mismanaging plan assets resulting in a loss of about $90 million to participants in the AMEC Ministerial Retirement Annuity Plan, according to court documents.
The defendants in the December settlement are the annuity plan, the African Methodist Episcopal Church, AMEC Department of Retirement Services, AMEC General Board and AMEC Council of Bishops, known collectively as the AME defendants in court documents.
The AME retirement plan, like all church plans, had been exempt from stricter reporting rules, less regulation and greater funding flexibility required by ERISA, which covers private employer retirement plans. Exempt retirement plans also include those offered by governmental entities, including school districts and state auto-IRA plans, and overseas retirement plans for nonresident aliens, also are exempt, according to the Department of Labor.
Church plans may elect to become an ERISA plan, a one-time irrevocable decision. In fact, one provision of the December settlement was that the AME retirement plan would become an ERISA plan.
Defendants in the March 2025 and December 2024 settlements were initially sued in March 2022, followed quickly by five similar lawsuits. The complaints were consolidated as In Re Church Employee Retirement Fund Litigation.
During the course of the litigation, plaintiffs sued about two dozen defendants. Court documents said the other defendants aren’t part of the two settlements, and that resolution of claims against the nonsettling defendants are pending. Some defendants cited in the settlements sued each other.
Defendants in both settlements deny wrongdoing.
“Newport denies that it has any liability for the alleged violations,” the March Newport settlement document said. “A settlement with Newport on the terms set forth in this agreement is fair, reasonable and adequate, and in the best interest of class members. All those investing in the annuity plan as of June 30, 2021, are covered by the Newport settlement."
“The resolution of Plaintiffs’ claims against the AME defendants provides significant funds to the aging group of class members much quicker than could be obtained through protracted litigation,” said the December settlement document with the AME defendants.
The agreement will help the class members “meet their current and ongoing financial obligations without the delay, uncertainty, and cost of continued litigation,” the document said. “It also allows plaintiffs to focus all their litigation efforts on seeking relief from the non-settling defendants.”
In addition to agreeing to abide by ERISA, the AME defendants also agreed to phase out and close the AMEC Department of Retirement Services; transfer plan funds from Symetra Life Insurance Co., which is one of the nonsettling defendants to a qualified trust; and require that the funds in the trust be invested by an independent third party. The December settlement document said these nonmonetary provisions were implemented in August 2024.
