The nation’s private pension insurer said it stepped in because the underfunded Pascack Valley Hospital Pension Plan would be unable to pay benefits when due and faced abandonment following the sale of substantially all the company’s assets during bankruptcy proceedings.
“Hospitals across the country are being hit hard by declining revenues,” said PBGC Director Charles E.F. Millard, in the announcement. In recent testimony before the U.S. House Education and Labor Committee, Millard the PBGC is concerned about employers in the health care sector, such as small hospitals, who have thin operating margins and are not-for-profit entities (See Millard Responds to Committee Questions ).
Millard used the occasion of the takeover of several plans from a New York hospital to declare his agency was watching closely for other similar crises by hospital companies (See PBGC Takes Over Four Plans of NY Hospital).
The PBGC estimates that the Pascack plan is 67% funded, with $93.1 million in assets to cover $138.9 million in benefit liabilities. The agency expects to be responsible for $42.2 million of the $45.8 million shortfall.
According to the announcement, the plan ended as of November 21, 2007, and the PBGC became trustee of the plan on October 28, 2008. The agency said assumption of the plan’s unfunded liabilities will have no material effect on its financial statements, according to generally accepted accounting principles.