A news report in the Gainesville (FL) Sun said current and past employees of Shands HealthCare will still receive their accrued pension benefits, which will stop accruing for current employees starting July 1, 2011.
According to the Sun, as of July 2011, the employees will be moved into a cash balance retirement plan funded entirely by Shands and will be eligible for a 403(b) plan. Once the pension ends, employees will be enrolled in the Retirement Growth Account in which Shands contributes 3% to 5% of an employees’ pay based on years of service. They will also be eligible for the 403(b) plan in which Shands matches 75 cents to every dollar the employee contributes, up to 4% percent of their pay to be invested as they choose.
Hospital officials pointed to the Pension Protection Act that included strict cash funding provisions that were made more difficult by the stock market crash that lowered the plan’s base amount. In addition, lower interest rates have slowed fund growth while more people are living longer.
The nonprofit health care organization has not been offering the traditional pension to new employees since July 1, 1997. About 2,300 current employees out of about 13,000 total are receiving the traditional pension.
Shands’ pension liability is probably in excess of $600 million or $700 million and has been funded at $20 million to $30 million a year, the hospital said.