Care New England CFO: Memorial Hospital Employees' Pension Secure

Nov 16, 2017

Credit RIPR

Uncertainty shrouds the future of Care New England Health System, which this week moved one step closer to closing Pawtucket Memorial Hospital when it stopped accepting patients into its intensive care unit.

But a top Care New England executive says Memorial employees can rest assured about one thing: their pension plan.

Roughly 2,100 current and former Memorial  employees are enrolled in the hospital’s pension plan operated by Care New England, the second largest health system in Rhode Island. Unlike some other hospital pension plans, Care New England is legally obligated to fund Memorial’s plan -- even after the hospital closes, said Joseph Iannoni, Care New England’s chief financial officer.

 

“I believe if anything is secure in Care New England it’s our pension plans,’’ Iannoni said.

That’s because 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 is currently more than 80 percent funded, Iannoni said.

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

 

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.

 

By contrast, 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.

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, he said, above the $7 million anticipated in its 2016 audit report.

“We’ve been funding Memorial over and above the required (amount) since we acquired Memorial at end of 2013,’’ Iannoni said. The total pension contributions, he said, amounts to more than $19 million since 2013.

“Our pans are much more secure than they were a year ago or two years ago,’’ Iannoni said.

More than 300 Memorial employees also have accepted Care New England’s offer to receive lump-sum settlements for their pension benefits, Iannoni said, which will be paid out in December. The payments are part of the company’s “de-risking” strategy to reduce the plan’s liability, he said,  “which makes it easier to continue to fund the plan in the future.”