PBGC Protects Pensions At Brownsville General Hospital
FOR IMMEDIATE RELEASE
October 09, 2007
WASHINGTON- The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pensions of more than 450 employees of Brownsville General Hospital in Brownsville, Pa.
The PBGC stepped in because the hospital's pension plans were abandoned during Brownsville General's bankruptcy proceedings. The bankruptcy court approved the sale of substantially all the hospital's assets to The Pride Capital Group LLC for $435,000. The transaction did not provide for the continuation of the pension plans.
Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other participants will receive their pensions when they are eligible to retire.
The two plans are the Retirement Plan for Non-Professional Employees of Brownsville General Hospital and the Retirement Plan for Brownsville General Hospital Nurses.
Together, the plans have $10.6 million in assets to cover $13.7 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the entire $3 million shortfall. Although assumption of the unfunded liability was not reflected in the PBGC's fiscal year 2006 financial statement, the claim will not have a material effect on the agency's financial condition.
Brownsville General, located about 40 miles south of Pittsburgh, filed for Chapter 11 protection in the U.S. Bankruptcy Court in Pittsburgh on Jan. 24, 2007. The hospital plans to reopen in the fall with 48 beds.
Both plans were terminated on May 25, 2006, the same day the bankruptcy court approved the sale of the hospital's assets. The PBGC became trustee of the plan on Sept. 18, 2007.
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 Brownsville General Hospital 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. 08-03