CHATTANOOGA (WDEF) – Hamilton County’s largest employer takes steps to shore up their pension plan.
They are altering some benefit payouts to get control of the fund.
Officials say the pension is seriously underfunded… $46.7 million in cash, but should have another $83.7 million to meet the needs of retirees.
Their goal is to get the fund up to 80% of what it needs.
Board members rejected greater contributions to the fund from Erlanger or relying on fund investments to make up the difference. They say neither option would fix the fund in the short term.
So here is what they did instead, in Erlanger’s words:
- While not provided for under the Fund document, the Fund has historically allowed participants who continue to work past age 65 to receive an actuarially adjusted benefit upon retirement. Eliminating this practice and otherwise bringing Fund administration into compliance with the Fund document, will reduce the unfunded liability by approximately $8.6 million. Any benefits accrued by participants working beyond age 65 prior to this change will remain in effect. In the future a participant must weigh the benefits of continuing to work beyond age 65, receiving salary and benefits, including the defined contribution benefits offered by Erlanger or retiring at age 65.
- The second change will align the Pension Fund with most similarly situated defined benefit plans by changing the death benefit payable to the beneficiary of an active participant to 50% of the participant’s accrued benefit. This change is consistent with the current benefit payable to the beneficiary of a retiree receiving monthly payments. This will reduce the unfunded liability by approximately $1.1 million.
- This change will suspend the optional lump sum and periodic payment (other than monthly annuity payments) forms of benefit until the funded status of the Pension Fund reaches 80%.
“These solutions are fiscally responsible, legally sound, and immediately necessary to help restore the health and sustainability of the plan for participating associates,” said board member Ken Conner.
The changes take effect immediately.
They affect 1,300 current fund participants and 1,400 participants who no longer work for Erlanger.
All of them were hired before August 1st, 2009.