PBGC Assumes Pascack Valley Hospital Pension Plan
FOR IMMEDIATE RELEASE
December 19, 2008
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pension plan that covers about 1,860 former employees of Pascack Valley Hospital in Westwood, NJ.
The PBGC stepped in because the underfunded Pascack Valley Hospital Pension Plan would be unable to pay benefits when due and faced abandonment following the sale of substantially all the company's assets during bankruptcy proceedings.
"Hospitals across the country are being hit hard by declining revenues," said PBGC Director Charles E.F. Millard. "When health organizations like Pascack Valley Hospital cannot meet their obligations, the PBGC will step in to protect the pension benefits of the dedicated men and women who provide medical care to their community. They earned those benefits, and we are here to make sure they receive them."
Pascack Valley 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.
The PBGC estimates that the plan is 67 percent funded, with $93.1 million in assets to cover $138.9 million in benefit liabilities. The agency expects to be responsible for $42.2 million of the $45.8 million shortfall.
The agency will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended as of Nov. 21, 2007. The PBGC became trustee of the plan on Oct.28, 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.
Pascack Valley Hospital operated a 291-bed, non-profit medical facility, which filed for Chapter 11 protection in the U.S. Bankruptcy Court in Newark, NJ, on Sept. 24, 2007. The hospital stopped providing patient care on Nov. 21, 2007. During the bankruptcy case substantially all of the hospital's assets were sold to a buyer that did not assume the pension plan or continue the hospital's operations.
Within the next several weeks, the PBGC will send notification letters to all plan participants. Under provisions of the Pension Protection Act of 2006, the maximum guaranteed pension the PBGC can pay is determined by the legal limits in force on the date of the plan sponsor's bankruptcy. Therefore participants in the Pascack Valley Hospital Plan are subject to the limits in effect on Sept. 24, 2007, which set a maximum guaranteed amount of $49,500 for a 65-year-old. 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 Pascack Valley 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 investment returns.
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PBGC No. 09-07