PBGC Assumes Brooklyn Hospital Center Pension Plan
FOR IMMEDIATE RELEASE
October 04, 2007
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 1,770 workers and retirees of The Brooklyn Hospital Center, a 460-bed hospital center located in downtown Brooklyn, N.Y.
The PBGC stepped in because the company failed to pay more than $33 million in legally required pension funding contributions. The hospital also planned to end the pension plan as part of its bankruptcy reorganization.
The Brooklyn Hospital Center filed for Chapter 11 protection on Sept. 30, 2005, in the U.S. Bankruptcy Court in Brooklyn. On May 23, the court ruled that the hospital had met the financial requirements for a distress termination of the pension plan after determining that unless the pension plan is terminated, the hospital would not be able to pay its debts under a plan of reorganization and continue operations upon emerging from Chapter 11 protection.
Hospital retirees will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
According to PBGC estimates, The Brooklyn Hospital Center Retirement Income Plan is 27 percent funded, with $19.5 million in assets to cover $73 million in benefit liabilities. The agency expects to be responsible for $47 million of the $53.5 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which terminated as of March 31, 2006. The PBGC became trustee of the plan on Sept. 17, 2007. Assumption of the plan's unfunded liabilities will have no material effect on the PBGC's financial statements, according to generally accepted accounting principles.
Within the next several weeks, the PBGC will send notification letters to all plan participants. Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminated in 2006 is $47,659 per year. The maximum guaranteed amount is lower for those who retire earlier or elect survivor benefits. In addition, certain early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.
Workers and retirees with questions may consult the PBGC Web site, www.pbgc.gov or call toll-free at 1-800-400-7242. For TTY/TDD users, call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.
Retirees of The Brooklyn Hospital Center who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at http://www.pbgc.gov/workers-retirees/benefits-information/content/page13692.html.
The PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974. It currently guarantees payment of basic pension benefits earned by 44 million American workers and retirees participating in over 30,000 private-sector defined benefit pension plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by investment returns.
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PBGC No. 08-01