PBGC Will Guarantee Pensions for Over 1,300 in United Hospitals Plan
FOR IMMEDIATE RELEASE
July 29, 1997
The Pension Benefit Guaranty Corporation (PBGC) today announced it is stepping in to take over the United Hospitals Medical Center Pension Plan in Newark, NJ to make sure that workers are paid their pension benefits when they retire, even though the pension plan has been abandoned.
"Workers and retirees can rely on PBGC to provide the pension benefits promised by the medical center," said PBGC Executive Director David M. Strauss. "Because of the federal insurance program, hard earned benefits will not disappear with the company, which is no longer in business."
The hospital filed a Chapter 11 liquidating bankruptcy petition on February 19, 1997, and closed down the hospital and laid off employees on April 20, 1997, the date of plan termination. The pension plan is close to sufficiently funded, but there is no plan administrator to oversee the plan or place new people into retirement status. The pension plan covers almost 1,350 people, of whom 81 have retired and are receiving benefits from the plan's custodial bank. Another 35 workers who wished to retire have been unable to obtain benefits since there is no one to process their applications.
Pension benefits to retirees will continue uninterrupted. While it will take time for PBGC to obtain or reconstruct employment and payroll records for workers who want to retire, PBGC will pay pension benefits to those people who indicated they were retiring back to the date they were eligible and elected to retire.
Most of the participants will receive the same benefits they are now receiving or would be entitled to under the plan when they retire. The maximum pension guaranteed for workers in plans that terminate in 1997 is $2,761.36 (approximately $33,136 annually) for persons who retire at age 65 or later. The guarantee is lower for those who retire early or have survivor's benefits.
Workers and retirees do not need to take any action. Plan participants with questions should call PBGC's Customer Service Center at 1-800-400-7242.
PBGC is a federal corporation created under the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by more than 42 million American workers and retirees participating in about 50,000 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. 97-37