‘DEFINED BENEFIT’ PENSION PLAN IS DONE AWAY WITH AT NORTH ADAMS REGIONAL HOSPITAL
Posted: 06/10/2011 02:54:15 AM EDT
Friday June 10, 2011
North Adams Transcript
NORTH ADAMS — North Adams Regional Hospital is terminating its "defined benefit" employee pension plans as part of a stabilization effort that includes the restructuring of its $49.5 million debt, controlling costs and modifying operations to meet current patient-care needs.
Pension benefits accrued under the current pension system will not be lost, according to Dr. Arthur Turton, chairman of the Northern Berkshire Healthcare trustees.
"Unfortunately, when people hear the term ‘termination,’ in people’s minds it means people are going to lose their benefits. That’s not true," he said. "A better term is that the funds have been frozen — employees who were still using this system are no longer able to contribute to it."
Turton said the hospital is in the process of moving those pension benefits to the federal Pension Benefit Guarantee Corp., a government insurance program established by the U.S. Congress to ensure the benefits will be paid in full in the future.
"The government established this fund to ensure that employees of distressed institutions will not lose their retirement benefits," he said. "What happened with our pension plans and at other institutions like ours, changes in the stock market made our payments rise to levels at which we couldn’t keep it funded. There is no way we can keep up with those payments."
The defined benefit pension plans, which include the previous NARH Pension Plan and the NARH Retirement Income Plan, were frozen for a majority of the hospital’s employees in 2008 after the hospital’s contributions to the systems soared into the millions. Employees were moved to a new contributory pension system, known as the 403(b) plan, that includes a 150 percent employer match.
However, members of the Massachusetts Nurses Association were allowed to remain active in the defined benefit plan, as their union was hoping to establish a multi-employer pension system by the end of 2010 for the nurses to join.
"The MNA was not able to establish a multi-employer pension plan as they had hoped," said Arthur Scott, NBH’s vice president of operations. "Therefore, as we had agreed, the nurses stopped accruing defined pension benefits at the end of 2010, along with those other non-union employees who were still earning benefits in the plan at that time. At that point, the defined benefit plan was ‘frozen’ for all participants."
Although employees are no longer earning benefits under those pension systems, they have retained the pension they had earned prior to the freeze.
"By turning the plan over to the PBGC, the hospital is insuring that those earned benefits will be preserved for all of the plan participants, including current retirees, current employees who earned benefits prior to the transition, and those who earned benefits but no longer work here and have not yet reached retirement age," he said.
To reach Jennifer Huberdeau, email
“
