Bishop Neary's Spin-Off Decision

December 11, 2025

Dear Plan Participants,

We want to provide you with an important update regarding the Christian Brothers pension  plan. After careful review and at the recommendation of the task force, Bishop Neary has  decided to move forward with a spin-off from Christian Brothers.

This transition will occur in phases:

• Plan Freeze: Effective December 31, 2025, the current pension plan will freeze. This  means that new employees will not enter this plan, and current employees will stop  accruing additional pension amounts.
• Spin-Of: Funds will transfer from Christian Brothers to a new dedicated account in  2026. We anticipate this will take place sometime in the summer, but this timeline is  not yet definitive. We will keep you informed as details are finalized.

More information is below on each of these phases.

Pastors, site administrators, and principals were sent this information in advance to help  them be prepared to answer questions for employees. Please note that while we are  committed to timely updates, we do not yet have answers to all questions.

The timeline to file for this freeze, which begins January 1, was very tight. While we are  confident that freezing the plan is the best path forward, we wanted to take the necessary  time to work through remaining details. Our goal was to ensure this decision was made with  care and to share as much clear and accurate information with you as possible in this  update.

We understand that Christian Brothers sharing information prematurely may have caused  concern or frustration, and we appreciate your patience. These are complex matters that  require thoughtful discernment and the counsel of many experts, which can take longer than  we would hope. Thank you for your understanding as we seek to move forward carefully and  with everyone’s well-being in mind.

What is a spin-off?

A spin-off means the current pension plan managed by Christian Brothers will transition to  a different third-party administrator with oversight from the diocese to manage going forward.

Why was this option chosen?

As discussed in the November 20th webinar, we were presented with four options to address  the plan’s underfunding:

1. Stay with Christian Brothers: Continue current contributions plus significant  additional payments for years to come. This was financially unfeasible for most  parishes and schools, and trust in Christian Brothers’ management has diminished.
2. Withdraw from the plan: Pay the full underfunded amount (approximately $50 million) and leave management with Christian Brothers. This was not financially  viable.
3. Involuntary withdrawal from the plan: Stop any further payments to the plan and  Christian Brothers would retain responsibility. Benefit payments would continue to  retirees until funds run out. This would likely leave most if not all active employees  and terminated vested participants with no benefit.
4. Spin-Of: Transition the plan to diocesan and outside management. This option  provides the most flexibility and control to protect both retirees and active  employees.

What happens next?

The current plan will freeze, and starting January 1, 2026:

• New employees will not be entered into this new plan.
• Current employees’ funds will begin to be directed to a new trust account, and they will no longer receive credit for future service.
• Employees retiring between now and the time the spin-off is completed (mid-2026)  will still process retirement paperwork through Christian Brothers and the process for  retirees will remain the same until the point of the spin-off, including payouts of  retirement funds. The payout rate received will remain the same in the freeze period  as it currently is.
• Current retirees will continue to receive payments through Christian Brothers until  the spin-of occurs in mid-2026. After the spin-of, payments will continue to be  made — how much and by whom we do not yet know. There are still many layers of  decisions to be made for the time after the spin-off. Those details will be  communicated as they are determined.

Sites (parishes, schools, and the diocese) will continue to pay contributions into the

new trust and will likely be required to for several years to honor, as fully as possible,

the benefits retirees and employees have earned and depend on.

Our 403(b) plan — which is separate from the defined-benefit plan and whose funds are  managed by an outside company: Fidelity — will remain with Christian Brothers for now, as  we focus on completing the pension spin-off. Once that is finalized, we will explore moving  the 403(b) plan.

Between now and the spin-off date, some of the activities and decisions being worked on  will include, but are not limited to:

• Draft new plan documents for the spin-off plan (current pension plan that is moving.)
• Set up a trust, separate from any corporation of the diocese, parish, or school, in the  Plan’s name into which money will be transferred from Christian Brothers, and future contributions will be deposited beginning January 2026.
• Determine the payments for employees and retirees on the current Christian Brothers  plan, including a potential future payment plan.
• Determine a future retirement benefit plan for current and new employees moving  forward.
• Ensure all steps are taken carefully and correctly.

The decisions being made are complex and made with great care. We deeply appreciate the  service and dedication of everyone affected by this process. We have included a page of  some FAQs below. Please see this for additional clarification on some questions you may  have.

Thank you for your understanding and support as we work toward a solution that honors our  employees and retirees and also is financially feasible for our parishes and schools. We will  continue to communicate key information as soon as possible.

All up-to-date information for all employees and participants will be updated on our website:  https://stcdio.org/christian-brothers/

Frequently Asked Questions (FAQ)

Please note: We are sharing information as soon as it becomes available, rather than waiting  until every detail is finalized. This means some questions remain unanswered. Below is what  we know now, and we will continue to update you as new information emerges.

As a current employee of retirement age, will I still be able to retire after the freeze?

Yes, the freeze only stops new additional benefits being accrued under the plan. All  administration of the plan continues with employees still being able to retire and start their  benefits. Any changes would be communicated in advance.

As an employee, can I apply to retire, receive a lump-sum payment, and then be rehired full-time in my current job?

Currently, this is not recommended. There are strict IRS rules that could lead to tax  consequences and penalties for the employees. There are potential consequences to the  entire plan which put all employees and retirees at risk.

However, we are working on a way to legally allow employees over age 59.5 to receive an in-service distribution, meaning to take a lump sum while still employed in the new year. That  can only happen by amending the new plan after the spin-off. This is a complicated legal  matter that we are working hard to resolve and will issue a communication once we have a  clearer picture of what is possible. For the time being, the freeze in January does not end the  ability to retire as one would prior to the freeze.

Will funds still be paid into this plan by parishes and schools, and if so, where are  those funds going?

The trust is currently being established, and the process is being worked out. We will share  detailed instructions as soon as possible. This will not happen until February for January  wages (December’s wages will be paid to Christian Brothers in January.)

Why do parishes and schools need to continue making payments if the pension is  frozen?

Even after the freeze, contributions will likely be required for several years to honor, as fully  as possible, the benefits retirees and employees have earned and depend on. We are

exploring options that balance fairness to employees with the financial realities of parish and  school budgets.

What happens with retirement plans for new and current employees going forward?

We are actively working on this and will provide guidance as soon as decisions are made.

Will these funds be directed to the diocese in 2026?

Funds will be placed in a trust account for the diocese but will not be part of the diocesan  operating budget. These funds will be held exclusively for paying retirement benefits to  employees and retirees.

The parish/school doesn’t currently participate in the 403b or doesn’t currently  contribute or match the 403b. Can locations begin doing that before the new plan is in  place?

Yes, parishes and schools can set up a 403b that allows employees or the employer to  contribute or match contributions. For more information, please contact your employer.