PBGC Negotiates Agreement to Preserve Wyoming Valley Health Care Pension Plan
FOR IMMEDIATE RELEASE
May 13, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced an agreement that will preserve a pension plan covering 3,800 workers and retirees at Wyoming Valley Health Care System Inc. in Wilkes-Barre, Pa.
"We have been monitoring the pressures facing medical care providers and have been actively working to help them find solutions to their plan funding difficulties," said Vince Snowbarger, acting director of the PBGC. "The agency will continue to work with plan sponsors like Wyoming Valley to help keep their plans ongoing so current and retired employees can receive all the benefits they have earned."
The pension plan faced abandonment following the sale of Wyoming Valley's assets to Community Health Systems Inc. of Franklin, Tenn. The transaction did not include the pension plan.
Under an agreement with the PBGC, $50 million in sale proceeds will be used to shore up the pension plan. Following the sale's completion on May 1, a significant portion of the $50 million will be contributed to the plan. The remainder will be placed in a trust on behalf of the plan until 2013, when the plan sponsor is required to initiate a standard termination of the pension plan if the sponsor can satisfy the requirements for a standard termination at that time.
In a standard termination, the plan sponsor opts to end a plan with assets sufficient to pay all benefits earned by those enrolled. To achieve this, the plan either buys annuities for participants and beneficiaries from a private-sector insurance company that provides annuities, or if the plan permits, pays the benefits directly to participants as lump sums.
If there are not sufficient assets to fund a standard termination of the Wyoming Valley Health Care Pension Plan in 2013, then all remaining trust assets must be contributed to the plan.
In fiscal year 2007, 1,225 single-employer plans ended in standard terminations, representing about 4 percent of all single-employer plans that the agency insured at the beginning of the year. Additionally, in fiscal year 2007, the agency became trustee of 110 insolvent plans that were sponsored by financially distressed employers.
A majority of the single-employer plans that ended in standard termination during FY 2007 were small plans. Seventy-five percent had fewer than 25 participants, and more than 90 percent had fewer than 100 participants.
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 29,000 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. 09-25