Pensions for Forum are secure, PBGC says

By WILLIAM K. ALCORN

alcorn@vindy.com

YOUNGSTOWN

Retired employees of recently sold Forum Health will not miss any pension checks, nor should current workers when they retire, the Pension Benefit Guaranty Corp. says.

The federal pension agency has started the process of taking over bankrupt Forum’s defined-benefits pension plan, which officials said could take months.

In the meantime, Forum will administer the plan, which has sufficient assets to cover payments to retirees until the federal takeover, according to PBGC.

Forum Health, which consists of Northside Medical Center in Youngstown, Trumbull Memorial Hospital in Warren and Hillside Rehabilitation Hospital in Howland, and various pharmacy, lab and home health-care subsidiaries, filed for protection under Chapter 11 of the U.S. Bankruptcy Code on March 16, 2009. Efforts to reorganize, which is the goal under Chapter 11, were unsuccessful, and the hospital system was sold this month to Community Health Systems for $120 million. Final approval of the sale is pending a state review.

Community Health Systems is not liable for Forum’s pension obligations under its purchase agreement, said Tomi Galin, CHS vice president of corporate communications.

That leaves the pension in the hands of the PBGC, an unsecured creditor with a claim against Forum of $170 million, the amount the pension plan is underfunded.

Also, Forum was behind on its contributions to the pension plan when the hospital system was sold earlier this month, the self-funded federal agency said.

When Forum requested that PBGC take over its pension plan in July 2009, it covered about 7,132 working and retired employees. Forum’s quarterly pension-plan contribution was about $1.5 million. As of Dec. 31, 2008, the pension plan’s assets of $205,419,808 equalled only 63.7 percent of its $322,631,706 in projected benefit obligations.

At the time, maximum monthly PBGC pensions for those who retired that year ranged from $1,822 for a 55-year-old who wants payments for a surviving spouse to $7,470 for a 70-year-old who does not want surviving-spouse payments.

However, the PBGC did not move on Forum’s request as long as there was a chance Forum would be reorganized rather than sold and be able to maintain the pension itself, the agency said.

“Now that Forum is sold, we’ll move to terminate it and take it over. It is a priority,” a PBGC spokesman said.

In taking over the pension plan, PBGC becomes responsible to pay full benefits up to the guaranteed limit of $54,000 a year. It is not known at this point if any Forum retirees receive more than the guaranteed limit, the agency said.

When the agency terminates pension plans, it works closely with plan sponsors to ensure retirees don’t miss a check.

Forum has said it would willingly work with PBGC to make sure the hand-off goes as smoothly as possible. The goal, and the agency’s mission, is to make sure people continue to get their checks on time, the PBGC spokesman said.

One new benefit Forum retirees will be eligible for once PBGC starts signing their checks is the federal health-care tax credit program spelled out in the 2009 American Recovery and Reinvestment Act, also known as the stimulus bill.

Among other things, the HCTC now pays for 80 percent of qualified health plan premiums, the agency said. However, the ARRA changes are set to expire Dec. 31, 2010, unless reauthorized by Congress.

When PBGC assumes Forum’s 42-year-old pension plan, it receives the plan’s assets as well as its liabilities, which represent the amount the plan is underfunded.

The pension benefit guaranty corporation gets its money from assets of pension plans it takes over, which by their nature are underfunded; from premiums that pension plan sponsors pay, and from investments. At the end of the day, we are one very large pension fund, said the agency, which considers Forum Health a medium-small takeover.