PBGC Protects Pensions at Lock Haven Hospital
FOR IMMEDIATE RELEASE
March 10, 2008
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the Lock Haven Hospital pension plan that covers more than 600 hospital employees in Lock Haven, Pa.
The PBGC stepped in because the pension plan would be unable to pay benefits when due and faced abandonment following the sale of substantially all the company's assets.
Lock Haven Hospital was founded in 1897 as a non-profit institution. On July 31, 2002, the hospital's assets were sold to a unit of Community Health Systems, a for-profit hospital chain based in Franklin, Tenn. The majority of hospital employees continued to work at Lock Haven, but the retirement plan was not included in the sale.
Following the hospital sale, the non-profit entity that operated Lock Haven Hospital changed its name to CCL Health and Wellness Foundation. The remaining assets under the foundation's control were sold and most of the proceeds were used to fund the pension plan. The foundation ceased to exist after the plan ended.
According to PBGC estimates, the Pension Plan for Employees of Lock Haven Hospital is 85 percent funded, with assets of $13.3 million to cover $15.6 million in benefit liabilities. The agency expects to be responsible for the entire $2.3 million shortfall.
The agency will take over the assets and use PBGC insurance funds to pay guaranteed benefits earned under the plan, which terminated on Jan. 15, 2008. The PBGC became trustee of the plan on Jan. 30, 2008. 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 terminating in 2008 is $51,750 per year 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 Lock Haven 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. 08-25