PBGC Protects Wadley Regional Medical Center Pension Plan
FOR IMMEDIATE RELEASE
September 29, 2009
WASHINGTON-The Pension Benefit Guaranty Corp. (PBGC) today announced it has assumed responsibility for the underfunded pension plan covering more than 650 former workers and retirees of Wadley Regional Medical Center, a non-profit hospital in Texarkana, Texas.
The PBGC stepped in because the Wadley Regional Medical Center Pension Plan faced abandonment because the hospital liquidated all of its assets under bankruptcy proceedings, and there would be no entity left to finance or administer the plan.
Wadley 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 Wadley Regional Medical Center Pension Plan is 85 percent funded with assets of $9.8 million to cover $11.5 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the entire $1.7 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended on March 1, 2009.
Within the next several weeks, the PBGC will send notification letters to all participants in Wadley's retirement plans. 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 plan are subject to the limits in effect on Jan. 14, 2009, which set a maximum guaranteed amount of $54,000 a year for a 65-year-old. The agency became trustee of the plan on Sept. 21, 2009.
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.
Wadley Regional Medical Center operated a 372-bed acute care healthcare facility that offered a range of services including maternity, pediatrics, cardiac care, cancer treatment and 24-hour emergency care. After unsuccessful efforts to recapitalize the business, Wadley filed for Chapter 11 protection in the U.S. Bankruptcy Court in Texarkana, Texas, on Jan. 14, 2009. On Feb. 20, 2009, the bankruptcy court approved the sale of all of Wadley's assets to Brim Healthcare of Texas LLC, an affiliate of Brim Healthcare Inc. in Brentwood, Tenn.
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.
Wadley retirees 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 have no significant effect on the PBGC's financial statements because an estimate of the claim was previously included in the agency's fiscal year 2008 financial statements, in accordance with generally accepted accounting principles.
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. 09-60