WASHINGTON- September 14 - The Pension Benefit Guaranty Corporation (PBGC) today announced it is moving to assume responsibility for the pension plan covering more than 9,500 workers and retirees of St. Vincent Catholic Medical Centers (SVCMC), the hospital and healthcare system based in New York City's Greenwich Village section on the West Side of Manhattan.
Shortly after filing for bankruptcy on April 14, 2010, SVCMC received N.Y. State Dept. of Health approval of its plan to close the hospital. By the end of May, all patients had been discharged or transferred to other facilities and debtors began selling off SVCMC's assets and on-going businesses.
The pension insurer is stepping in because the underfunded retirement plan will be unable to make benefit payments and be abandoned after SVCMC's assets are liquidated, its activities cease and there is no one left to administer the plan. No asset buyer has agreed to assume responsibility for the plan. By taking action now, the PBGC prevents further deterioration of the plan's condition.
The Saint Vincent Catholic Medical Centers Retirement Plan is 55 percent funded, with assets of $345 million to cover benefit liabilities of $622 million, according to PBGC estimates. The agency expects to cover about $267 million of the $277 million shortfall.
The PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended as of Sept. 14, 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. Until the PBGC becomes trustee, the plan remains ongoing under SVCMC sponsorship.
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 SVCMC pension benefits until the agency becomes trustee of the plan. At that time, the agency will send notification letters to all plan participants. Workers and retirees with general questions about the PBGC and its benefit guarantees may consult the PBGC Web site, www.pbgc.gov.
SVCMC 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 increase the PBGC's claims by $266.9 million and was not previously included in the agency's fiscal year 2009 financial statements.
SVCMC previously filed for bankruptcy in 2005 and emerged in 2007. As part of the plan of reorganization in that bankruptcy, PBGC negotiated an additional contribution of $75 million to the Retirement Plan upon emergence and additional payments in later years.
The PBGC is a federal corporation created under ERISA. It currently insures the basic pension benefits of about 44 million American workers and retirees in more than 29,000 private-sector defined benefit pension plans. The Corporation receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns.