PBGC Moves to Protect North General Hospital Pension Plan
FOR IMMEDIATE RELEASE
December 08, 2010
WASHINGTON-The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the underfunded pension plan covering almost 500 workers and retirees of bankrupt North General Hospital, located in the Harlem section of New York City.
The PBGC is stepping in because the underfunded retirement plan will be unable to make benefit payments and abandoned after the hospital completes its bankruptcy liquidation proceeding. North General filed for bankruptcy on July 2, 2010, ceased operations as of July 20, 2010, and discharged most employees except those handling the wind-down and sale of the hospital's assets.
The North General Hospital Pension Plan is 33 percent funded, with $8.7 million in assets to cover $26.7 million in benefit liabilities, according to PBGC estimates. The agency expects to be responsible for the entire $18 million shortfall in the pension plan, which has been frozen since December 31, 2005.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which terminates as of December 8, 2010. Retirees and beneficiaries will continue to receive their monthly benefit checks without interruption, and other workers will receive their pensions when they are eligible to retire.
Under federal pension law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2010 is $54,000 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.
The PBGC will not have specific information about North General Hospital pension benefits until the agency becomes trustee of the plan. At that time, the agency will send notification letters to all plan participants. Until then, the plan will continue to be sponsored by North General Hospital. Workers and retirees with general questions about the PBGC and its benefit guarantees may consult the PBGC web site, www.pbgc.gov.
North General Hospital 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 North General Hospital Pension Plan's unfunded liabilities will have no significant effect on the PBGC's financial statements in fiscal year 2011 because the claim will be included in the agency's fiscal year 2010 financial statements, in accordance with generally accepted accounting principles.
The PBGC is a federal agency that guarantees payment of private pension benefits when companies and pension plans fail. It protects some 44 million Americans in over 27,500 private defined benefit pension plans. The PBGC pays benefits using insurance premiums and assets and other recoveries from plans and their sponsors; it receives no taxpayer funds.
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PBGC No. 11-16