Pa. Hospital Freezes Non-Union Pension Plan

May 19, 2009 ( - Faced with the continued effects of the recession, Washington Hospital in Pennsylvania announced it will freeze its defined benefit pension plan.

A story in the Observer-Reporter newspaper said the move affects about 1,400 nonunion employees, including management positions, and will be effective July 1 for all of the hospital’s operating units, including its off-site functions.

The hospital has 1,853 full-time employees, and about 400 of those are unionized. Chief Executive Officer Telford Thomas said the hospital is contractually bound to contribute toward the pensions of union employees, whose current contract expires January 31, 2010.

In a May 14 employee letter Thomas wrote that the recession “has caused a temporary flattening of patient volumes, decreases in payments from government sources and increases in delinquent accounts as people have either lost insurance altogether or had it reduced. Pension plans have been negatively impacted as well as our cash reserves on hand to meet operating costs and new practices. As a result, we have made the decision to freeze the pension plan for all nonunion participants effective July 1, 2009.”

“It’s nothing that anyone here did,” Thomas said. “We have to respond to what’s happening out there.”

Thomas told employees that they will not lose any benefit they have earned through June 30, and that it will be paid at the time of their retirement.

“We are currently exploring other retirement plan options that balance the need of managing costs while providing you with a measure of future retirement security,” Thomas wrote, according to the newspaper.