PBGC to cover pension benefits of defunct N.J. hospital
By Paula Aven Gladych
The Pension Benefits Guaranty Corp. has agreed to pay pension benefits to more than 800 former employees of the Hospital Center at Orange, a facility that provided primary and emergency care in Orange Township, N.J., before closing its doors in 2004. This was a reversal of a prior opinion.
The hospital’s pension plan originally was covered by the Employee Retirement Income Security Act and protected by PBGC. In 2003, it became affiliated with Cathedral Healthcare System Inc., a church plan, and the IRS removed it from PBGC’s protection.
The Pension Rights Center asked that the PBGC and the IRS revisit the designation.
In a letter posted May 10, the Pension Rights Center praised PBGC for pushing to protect the hospital’s retirees.
"The PBGC's actions helped rectify an injustice that the law never intended, and illustrate your agency's strong commitment to the protection of pension plans and participants," the letter said.
According to PBGC estimates, as of Jan. 1, 2009 (the plan termination date), the plan had $11 million in assets to pay $41 million in benefits. The agency expects to cover the entire $30 million shortfall and will pay the benefits owed under the plan.
Retirees will continue to get benefits without interruption, and future retirees can apply for benefits as soon as they are eligible.
Originally published on BenefitsPro.com