This week, the Pension Rights Center (PRC) strongly responded to these documents. Joellen Leavelle of the PRC released a detailed update on the PRC's blog, and the PRC released two new related Fact Sheets:
- Saint Peter's University Hospital Retirement Plan: The law and the facts
- Saint Peter's University Hospital Retirement Plan: Responses to statements made in the February 24, 2012 letter and accompanying Q&A
Please read these new responses. It's great to know that such a savvy organization has our back on this issue.
We are still reeling from CEO Rak's repeated assertions that "Saint Peter’s pension plan has never been... an ERISA plan" nor "subject to the protections of the Pension Benefit Guaranty Corporation ('PBGC')." We would direct their attention (and yours) to the copious documentation the hospital has published over the years since ERISA went into effect in 1974. We have posted an example document, a 1990s-era plan summary, with some of the ERISA sections highlighted. Not only was the plan subject to ERISA oversight, the Trustees took it as their express responsibility to ensure compliance. Similar language appeared in plan documentation from 1974 through 2006, when the hospital decided it was advantageous to convert the plan to a "church plan." ("We've been a church plan since 2006," hospital administrators told us in December 2011 town-hall meetings.)
It's unclear just how the hospital can declare 32 years of documented history null and void, without an explanation other than that "our outside pension consultants and attorneys" have given their permission. The hospital asks us to trust that they have the participants' best interests at heart. In our opinion, from here on, that trust must be earned—and the hospital's assertion of history-contradicting "facts," though it might gain the approval of retirement-industry lawyers, earns no trust from us.
In addition to the detailed rebuttal from the PRC, we'd like to address a couple of the hospital's Q&As.
In Q&A question 3, the hospital asks: "The letter says that the pension plan has never been subject to PBGC insurance guarantees. Does this mean that I have no protection for my pension benefit?"
When the hospital went to the trouble of posing these hypothetical questions, they should at least have answered them directly. Instead, the hospital repeats that "the pension plan has never been subject to PBGC insurance"—though it has paid PBGC insurance premiums for the past 38 years, and continues to do so—and throws up a smoke screen by denigrating the PBGC and its insurance coverage. They finish in a disgustingly patronizing manner: "The best 'protection' that one can have is for all employees to work as part of the Saint Peter’s team, helping to make us an even better, more profitable hospital." Barf.
The PRC's rebuttal points out that the PBGC would cover all benefits up to a maximum of about $56,000 per year at age 65 in the event of plan termination. SPUH is still paying PBGC premiums, and will unless and until the IRS deems the plan a "church plan." But we'll take the liberty of answering the original question directly: should this happen, the excellent PBGC coverage will end.
We especially liked question 4, since the hospital mentions blogs (the PRC's and ours are the only blogs discussing this issue that we know of). We'll repeat the answer verbatim:
Let’s be clear about this – management cannot steal your pension money. Your pension money is held in a trust and management takes its responsibilities for ensuring the integrity of such trust very seriously. If someone tells you or writes or blogs otherwise, treat the claim as what it is: wholly inaccurate.See what they did there? No blog, especially this one, has claimed that management would empty the SPUH pension. Yet in debunking this claim, they get to characterize "blogs" as "wholly inaccurate." This is known as a "straw man" argument, and it's used by people who would lose an argument on the actual merits.
We believe it's true that in general, due to the absence of Federal oversight, a hospital overseeing a "church plan" could just dip into the funds, as the Hospital Center at Orange is alleged to have done. However, SPUH claims that its pension funds are held in an irrevocable trust, so it cannot do such a thing. We have always accepted this claim. There are other ways that organizations can increase their bottom line at the expense of their pension plan, however. Without ERISA oversight, they can reduce the plan funding. They can replace the plan with a cheaper plan, e.g., a new pension with a reshuffled and/or confusing benefits schedule, or even a 401(k). (The replacement plan announced in the Rak letter, though it is designed to "protect your pension benefit," is not characterized specifically as a pension plan, or anything else for that matter.)
The hospital may have good reason for making changes to the pension plan. Management's failure to communicate honestly with the participants can only lead us to believe that we participants are not their chief concern. What other conclusion can we reach?