Health Sector Not-for-profits Underfunding DB Pension Plans

June 1, 2006 ( - The number of not-for-profit hospitals and health systems that have fallen behind in funding their DB pension plans has climbed in the past few years, a recent report found.

According to a new report by Standard & Poor’s, mounting pension obligations of not-for-profits could hurt their liquidity and credit ratings, according to

Competing demands for capital, such as construction and new technology, have only amplified pension deficits for not-for-profits, according to the news Web site. And worse, S&P said in the report that the entities have “no clear plan for funding shortfalls.”

Poor investment returns have also contributed to spiking increases in pension contributions, S&P said. Assumptions for investment returns fell to between 6% and 7% in 2004-05, from between 9% and 10% previously, reflecting recent lower returns, S&P analyst Ken Rodgers said, according to the report.