PBGC Takes Over Cash Balance Plan

>The New Rochelle, New York-based not-for-profit hospital’s cash balance retirement plan has only $19 million in assets to cover $57 million in benefit promises.   The Pension Benefit Guaranty Corporation (PBGC) estimates almost all benefits accrued by workers in the plan are covered by the agency’s insurance guarantees, according to a news release.

“The PBGC is stepping in because Sound Shore Medical Center has missed more than $22 million in contributions to its pension plan, which is only 33% funded,” Acting Executive Director Vince Snowbarger said in a news release (See  Ex-Kansas Congressman Named as Acting PBGC Chief ). “Retirees will continue to receive their monthly benefit checks without interruption, up to guaranteed federal limits, and other employees will receive benefits when they are eligible to retire.”

>The pension plan ended as of December 31, 2003.

The PBGC, created by the Employee Retirement Income Security Act (ERISA) to guarantee private-sector pension benefits, currently backs pension benefits for about 44 million American workers and retirees participating in over 31,000 private sector defined benefit pension plans.  The agency is financed by insurance premiums from covered companies and investment income.