Click here for a short summary of the issue. Click here for a detailed timeline.
See also the Pension Rights Center website.
Click here for ex-St. Peter's CEO John Matuska's 2011 letter to the IRS.
Click here for ex-St. Peter's VP of HR Bruce Pardo's 2011 letter to the IRS.
Haga clic aqui para verun resumen del problema en español.

Sunday, March 4, 2012

Pension Rights Center's Response (and Ours)

It's been about a week since St. Peter's CEO Ron Rak released a letter announcing the hospital's plan to end the St. Peter's Retirement Plan as we know it. The hospital's PR director concurrently released a "Q&A" document, answering questions which no one had actually asked.

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:

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?


  1. Gee I wonder if Mr. Rak used the Daniels Group as one of his "Consultants" on this issue. See the danielsgrp . com website. I clicked on "Our Team" and "Church Services" - it just keeps getting deeper.

  2. Most of you know me or at least know my name. I am Larry Kaplan and I retired in 2001 as Mgr. of Food/Nutrition Services. I am writing this comment as an anonymous contributor because I cannot figure out how to enter it any other way. I have been collecting my pension for almost 11 years and would be devistated if it were reduced or eliminated. This is what we were promised and this is what we are entitled to. This group of administrators are the same people that were instrumental in changing the plan at Hosp. Ctr. at Orange and denying the employees of what they were entitled to. We all know, or should know that we were hired with the understanding that we were covered by ERISA, and we all know that the Hospital has been paying into that fund for our protection. THE ONLY WAY THAT THE HOSPITAL CAN BECOME A CHURCH PLAN IS IF THE IRS APPROVES IT.They are hiding behind friendly attorneys and consultants. (friendly to the administration). Just ask any of the employees who were hired in the 80's and 90's to show you their benefit information. It states that the plan is covered by ERISA and not a Church plan. If you want to lose your pension or have it reduced, just continue sitting on your hands.Don't do anything and don't expect the next person to help you when you lose your pension or have it reduced. To state that "the best protection that one can have is for all employees to work as part of the Saint Peter's team" is absolutely absurd. Do not allow them to insult your intelligence and do not expect to have Shop Rite honor this letter in lieu of payment when you lose or have your pension reduced. Another thing, the plan is now an ERISA plan so there would not be a five year phase in period. I can go on and on, but the bottom line is that ONLY YOU CAN SAVE YOUR BENEFITS. YOUR FRIEND HAS HIS/HER OWN PROBLEMS, SO DO NOT SIT AROUND AND EXPECT SOMEONE ELSE TO PAY YOUR EXPENSES WHEN YOU HAVE NO MONEY. Do not believe that it is cheaper when you retire. The only money that you will save is your gas money for travel to work. You still have to eat, rent/own, pay insurance, gas , electricity, cable, etc. etc. Continue to read this blog and tell everyone that you know to do the same. Become involved. We all know that the folks upstairs are reading this blog, so you can still read it and enter your comments anonymously. The more people that become members, the better it will be for you in the long run, and it comes very fast.

  3. Yes! you are right there Mr. Kaplan,a lot of Nurses are talking about it but I think the problem is they are too tired to go to the internet and see what is new . They work 12 hour shift in fact I ask them if they have a chance too read the comments I incourage the nurses that i know to go to the internet they are very concern about it. I mailed their letters addressed to the IRS on the way home couple of months ago before the deadline. The new administration are taking advantage of it. I have my booklet with me when I first hired it doesn't say church plan. Ronald Rak is a big fat liar!

  4. Hi. This is Wendy Silverstein. Although I left St. Peter's in 2009, I expected more of an institution to which I dedicated 22 years of my professional career. It is nonsense that they are now claiming this is not an ERISA plan. I have an undated, document called the "Summary Plan Description" which I received many years ago. This document lists John Matuska as one of the trustees. It specifically spells out our participation in an ERISA plan, and Appendix C contains the "Statement of ERISA Rights". The document unfortunately was printed on plain paper with no dates, no watermarks, no logos, and no official signatures. Is there no other documentation available that which is more "official" looking?

    1. Our dedication is nothing to Ronald Rak! He care less!!! Hey guys I am 200% vested at my previous employer!!!! I have to look into that. I hope human resources staff will write a comment on this if they are concern about their pension. I am planning to retire but I am afraid I might not afford it. Mr. Kaplan is right that we still have to eat,rent/own pay insurance and etc., because of Raks administration the Raketters I don't know why they hire a ruthless! heartless! CEO that came from corporate company.

  5. I have been at Saint Peters for twenty-five years. I sent a letter to Ronald Rak over a month ago expressing my disappointment and disgust over the actions of the Board of Directors. It comes as no surprise that I have yet to receive acknowledgment of my letter. If their actions were defensible, I would have received a reply explaining the decisions being made. The employment information I received, as did so many others, clearly states we were protected under the ERISA plan. The claims made in the e-mail we received stating that the hospital is not and never has been covered by ERISA are clearly not true. I miss the days when I was proud to work for Saint Peters and when our president, Sister DePazzi, led by example, and valued both patient care and employee dedication.

    1. That is exactly why I resigned from SPUH. No more putting the patient first. It was all about the money. Sure, it takes a lot of money to run a hospital, but do not do it at the patients and employees expenses.


Since most of our comments these days are spam, we now require comment moderation. You can still leave an anonymous comment, but it won't appear on the blog until we can check it and approve it for publication. Please be civil (and don't spam us).