PBGC Assumes Amsterdam Memorial Hospital Pension Plan
FOR IMMEDIATE RELEASE
June 11, 2009
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it has assumed responsibility for the pension plan that covers more than 830 current and former employees of Amsterdam Memorial Hospital in Amsterdam, N.Y.
The PBGC stepped in because the underfunded Amsterdam Memorial Hospital Employees Pension Plan failed to meet minimum funding standards and would be unable to pay benefits when due. Additionally, the plan would be without a sponsor following the hospital's sale to a competitor. The transaction did not include the retirement plan.
Amsterdam Memorial 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 60 percent funded, with assets of $13.6 million to cover benefit liabilities of $23 million. The agency will be responsible for $9.2 million of the $9.6 million shortfall.
The agency will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on April 30, 2009. The PBGC became trustee of the plan on May 26, 2009.
Amsterdam Memorial Hospital was founded in 1889 and provides inpatient rehabilitation services, outpatient treatments and skilled nursing services in Montgomery and Fulton Counties in New York State. In March, Amsterdam Memorial and its affiliate Mohawk Health Alliance Inc. signed an acquisition agreement with its rival St. Mary's Hospital, also located in Amsterdam. Without the acquisition agreement, Amsterdam Memorial expected to close because it lacked sufficient capital to remain in service. As part of the transaction, the PBGC negotiated with the two hospitals and the New York State Department of Health for $7 million to be transferred into the pension plan for the benefit of its participants.
Within the next several weeks, the PBGC will send notification letters to all participants in the Amsterdam Memorial Hospital Employees Pension Plan. 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 day the plan ended. Therefore, participants in the pension plan are subject to the limits in effect on April 30, 2009, which set a maximum guaranteed amount of $54,000 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 the 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.
Assumption of the plan's unfunded liabilities will increase the PBGC's claims by $9.2 million and was not previously included in the agency's fiscal year 2008 financial statements
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. 09-36