The Pension Benefit Guaranty Corporation (PBGC)
announced it has assumed responsibility for the pensions
of more than 1,500 workers and retirees of Auburn
Memorial Hospital, a non-profit medical center in Auburn,
According to a PBGC news release, the agency stepped in after a bankruptcy court found that Auburn Memorial would not be able to survive outside of bankruptcy protection unless each of its four underfunded pension plans ended. The agency also moved to assume the plans because nearly $13 million in required contributions to the plans were unpaid.
Auburn Memorial sought Chapter 11 protection in the U.S. Bankruptcy Court in Syracuse on April 24, 2007. In December 2007, the court ruled that Auburn met the requirements under the Employee Retirement Income Security Act (ERISA) for a distress termination of each of the plans.
The four plans are:
- Auburn Memorial Hospital Retirement Plan for Non-Bargaining Unit Employees.
- Auburn Memorial Hospital Retirement Plan for Auburn Memorial Hospital Employees Represented by Licensed Practical Nurses & Technicians of New York, Inc., Local 721.
- Auburn Memorial Hospital Retirement Plan for Auburn Memorial Hospital Employees Represented by Local 1199 Upstate.
- Auburn Memorial Hospital Retirement Plan for Auburn Memorial Hospital Employees Represented by Local 3124 and Council 66, American Federation of State, County, and Municipal Employees.
Together, the plans have assets of about $37 million to cover $66.5 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for about $28.2 million of the $29.5 million shortfall.
Charles E.F. Millard
In the announcement, Executive Director Charles E.F. Millard said the agency is watching similar situations to Auburn's with hospitals across the nation.
"We have been actively monitoring the financial status of hospital systems across the country as the environment has gotten harder for them to remain viable," said Millard. "The agency will step in to protect the pension benefits of workers and retirees, like the ones at Auburn Memorial. These are hard-working professionals who have devoted their lives to providing medical treatment to members of their community. During their time of service, they believed that the retirement funds they were earning would be there when they needed them. We are here to make sure that happens."
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plans, which ended as of December 31, 2007.
« UBS Now Faces 401(k) Plan Investigation