Care New England: Board Votes To Secure Memorial Hospital Employees' Retirement Plan

Dec 22, 2017

Care New England Health System announced Friday it has taken steps to protect the retirement pensions for 2,060 current and former Memorial Hospital employees after the hospital’s planned closure.

Care New England’s board of directors voted Thursday night to effectively assume responsibility for Memorial's nearly $64 million pension debt as the company awaits a decision from state health officials on its plan to close the hospital, the company said in a statement.

The board “unanimously voted last night to withdraw Memorial Hospital from the obligated group for its bond debt, and to assume sponsorship of MHRI’s pension plans,’’ the statement said.  The move was described as an administrative step to ensuring the pension plan continues to be funded by Care New England, James Beardsworth, a company spokesman, said in a text message.

“In this way, we are able to honor our commitments to employees and bondholders leaving them in a more stable position than when we acquired Memorial," Dr. James E. Fanale, Care New England’s executive vice president, chief operating officer and chief clinical officer said in the statement.

Memorial's pension debt is $63.6 million as of Sept. 30th, down from $76 million a year earlier, Beardsworth said. Care New England's funding of the pension exceeds the funding requirements, he said.

Joseph Iannoni, Care New England’s chief financial officer, told Rhode Island Public Radio last month that Care New England was legally obligated to fund Memorial’s plan -- even after the hospital closes.

Memorial’s pension plan is federally-insured, which means Care New England is required to make regular contributions into the plan and maintain certain funding levels. Memorial’s plan as of November was funded more than 80 percent funded, according to Iannoni.

If Care New England gets sold, as expected, Massachusetts-based Partners Healthcare, or some other company, the new owner, he said, also would be obligated to fund Memorial’s pension plan. 

Care New England’s pension plans -- including the Memorial plan -- are all covered by the Employee Retirement Income Security Act, or ERISA, which sets minimum contribution requirements for plan operators.

(That’s very different from so-called church plans, like the troubled retirement plan at St. Joseph Health Services. Church plans are not federally insured and have no funding requirements.)

Care New England recently has been been working to shore up Memorial’s pension plan, Iannoni said. In 2017, the company contributed roughly $8.2 million to the plan, above the $7 million anticipated in its 2016 audit report.

More than 300 Memorial employees accepted Care New England’s offer to receive lump-sum settlements for their pension benefits, which Iannoni said would be paid out this month.

updated 11:56 a.m.