Feds to Protect St. Vincent Catholic Medical Center Pensions

The federal Pension Benefit Guaranty Corp. said this week it will assume responsibility for the pension plan covering more than 9,500 workers and retirees at the shuttered St. Vincent Catholic Medical Centers in New York City.

The SVCMC Retirement Plan is 55% funded, with assets of $345 million to cover benefit liabilities of $622 million, PBGC estimates. The agency expects to cover about $267 million of the $277 million shortfall.

PBGC said the intervention was necessary because the underfunded retirement plan will be unable to make benefit payments and will be abandoned after SVCMC's assets are liquidated, its activities cease, and there is no one left to administer the plan. By taking action now, PBGC prevents further deterioration of the plan's condition.

SVCMC, serving the Greenwich Village section on Manhattan's West Side, filed for bankruptcy on April 14, and by the end of May patients had been discharged or transferred to other hospitals, and debtors began selling off SVCMC's assets.

PBGC will take over the assets and use insurance funds to pay guaranteed benefits earned under the plan, which ended Sept. 14. Retirees and beneficiaries will continue to receive 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 law, the maximum guaranteed pension at age 65 for participants in plans that terminate in 2010 is $54,000 per year, or lower for those who retire earlier or elect survivor benefits. Some early retirement subsidies and benefit increases made within the past five years may not be fully guaranteed.

PBGC will not have specific information about SVCMC pension benefits until it becomes trustee of the plan, when PBGC will send notification letters to all plan participants. SVCMC retirees who draw benefits from PBGC may be eligible for the federal Health Coverage Tax Credit.

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 and additional payments in later years.

PBGC is a federal corporation created under ERISA. It insures basic pension benefits of about 44 million American workers and retirees in more than 29,000 private-sector defined benefit pension plans. PBGC receives no general tax money. Operations are financed by insurance premiums paid by companies that sponsor pension plans and by PBGC's investment returns.