Last updated on May 7, 2020
On October 15, 2019, the Pension Benefit Guaranty Corporation took responsibility as trustee for two defined benefit pension plans sponsored by Verity Health System. The Verity Health System pension plans ended as of April 30, 2019. Together, the two plans cover nearly 8,000 workers and retirees of Verity Health System.
PBGC will update the following questions and answers about the Verity Health System pension plans as more information becomes available.
PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private sector defined benefit plans - the kind that typically pay a set monthly amount at retirement. If your pension plan is insured by PBGC and it ends without sufficient money to pay all benefits, PBGC's insurance program will pay you the benefit provided by your pension plan up to the limits set by law.
PBGC receives no taxpayer dollars. Its operations are financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans.
Yes. Both Verity Health System pension plans are covered under Title IV of ERISA. However, because neither pension plan has been covered by PBGC’s insurance program for five years, pension payments will be affected by the legally-required five-year phase-in limit on PBGC’s benefit guarantee for new and newly covered plans that begins with the date of coverage.
No. The Verity Health System Supplemental Retirement Plan is an individual account savings plan, specifically a 401(a) plan. It is not covered by PBGC’s insurance.
No. The Verity Health System pension plans remained ongoing and under the responsibility of Verity Health System until April 30, 2019, the date the pension plans were terminated. While underfunded pension plans often terminate during bankruptcy proceedings, a company’s bankruptcy filing by itself does not terminate a pension plan. However, the date of the bankruptcy filing does affect the amount PBGC guarantees. Please see below.
Workers, retirees and beneficiaries covered by the Verity Health System pension plans should direct all pension benefit communication to the Pension Benefit Guaranty Corporation
Customer Contact Center.
Visit our Contact Us webpage for more information.
When an underfunded pension plan is terminated and transferred to PBGC, we notify plan participants and beneficiaries and provide information about their plan and about PBGC.
- If you are already receiving a pension from Verity Health System, your payments continue, without interruption, in the annuity form you chose at retirement.
- If you are not yet receiving a pension, we will pay you an estimated benefit when you become eligible and apply for pension benefits.
Visit our Apply for Your Pension Benefits webpage to find instructions and important information about starting your pension benefit.
If you are applying as a beneficiary of a deceased participant, please visit our Apply for Survivor Benefits webpage.
Yes. Our preliminary analysis shows that almost all people covered under the Verity Health System pension plans will receive reduced benefits because the pension plans were insured by PBGC for less than three years when Verity Health System entered into bankruptcy, August 31, 2018.
PBGC pays retirees estimated benefits while we complete the auditing, actuarial and legal work necessary for us to determine exact benefit entitlements under the law.
In order to limit overpayments, we adjust retirees’ estimated monthly benefits when we are confident in the quality of our information. We notify retirees in writing about 45 days in advance of adjusting estimated monthly payments because of legal limits on PBGC’s guarantees.
When we have completed our review of your plan:
- If you have received estimated benefit payments that are too high, we will adjust your future monthly payments to the correct amount, further reduced normally by no more than 10% until the overpayment has been repaid.
- PBGC does not charge interest on overpayments.
- If we have paid you an estimated benefit that is too low, we will make up the missed amounts in a single payment with interest.
No. You cannot earn additional pension benefits under your plan after the date the plan terminates.
Note: The Verity Health System froze benefit accruals for most participants in 2008 and 2011. By 2019, the only participants still earning additional benefits were certain members of the California Nurses Association. Active participants continued to earn service after the freeze date toward vesting, eligibility for early retirement, and certain forms of payment. However, on April 30, 2019 (Date of Plan Termination), all service accruals ceased. Please keep in mind, PBGC’s guarantees are based on service earned as of the date Verity Health System entered into bankruptcy, August 31, 2018.
PBGC follows “working retirement rules” regarding whether employees can begin pension benefits while working.
- If I have reached Normal Retirement Age (65), can I receive my retirement benefits?
Yes – When you reach age 65 you may receive your benefits while you are working, regardless of whom you are working for.
- If am under age 65, can I receive my retirement benefits?
Generally, yes. However, PBGC cannot pay early retirement benefits to participants who are still working for the company that sponsored the pension plan or for a related company.
The Verity Health System Retirement Plan A covers nearly 7,000 people and is 52% funded. The plan is underfunded by $306 million. A separate plan, the Verity Health System Retirement Plan B, covers about 1,000 people and is 74% funded. Plan B is underfunded by $2.8 million.
PBGC stepped in to become responsible as trustee because the company’s two pension plans would have been abandoned following the sale of Verity Health System’s assets.
Some pension plans offer their participants lump sum payments for the full value of their pensions, but PBGC generally does not. PBGC pays benefits in monthly payments for life. However, if the total value of your benefit payable by PBGC is $5,000 or less when the plan terminates and you have not started receiving monthly payments, you can receive a lump sum from PBGC.