SCHENECTADY — Former employees of St. Clare’s Hospital, having learned their pensions could be gone within a decade, will meet Sunday to discuss what recourse they may have for the failing pension plan.
“The natives are restless. We’re running scared,” said Loreen Daviero, of Amsterdam, a former St. Clare’s radiological technologist who is among the meeting’s organizers.
The meeting will begin at 11 a.m. at the Rotterdam Elks Lodge on Curry Road, where those who attend will meet with David Pratt, an Albany Law School professor who has been looking into the situation.
It’s the first large meeting since those affected began organizing through social media, though an organizing committee met last month at a Rotterdam diner, so Daviero expects a significant turnout.
“He’ll give us information. We realize it could be a long process,” said Daviero, who worked for the hospital for 23 years but is too young to start collecting her pension.
The former employees are reacting to a letter many received in the fall from St. Clare’s Corp., which said the employees’ pension plan will run out of money between 2024 and 2028. The letter also said the corporation — which ran the hospital — has no resources to replenish the fund.
St. Clare’s Hospital, which was affiliated with the Roman Catholic Diocese of Albany, merged with Ellis Hospital in 2008 as part of a state-overseen consolidation of medical services in the region.
More than 1,100 pensioners could be affected by the pension shortfall.
“These are people who never made a lot of money,” said Mike Verno, who worked for 32 years at the hospital and now lives in Florida. Verno rose from a teenage dishwasher to chief-operations manager, he said. He collects about $900 per month from the pension fund, which he said supplements Social Security payments.
“A lot of people depend on this pension,” Verno said. “They’re not going to be able to make ends meet.”
The pensioners’ situation falls outside the federal pension insurance guarantee rules that would normally apply.
Federal pension law guarantees future payments under most private pension plans, but the St. Clare’s plan is a “church plan,” meaning it is affiliated with a religious organization. That allowed it to be exempt from the guarantees and reporting requirements of the federal Employee Retirement Income Security Act.
That exemption was originally intended for churches and their employees but was expanded to include church-affilated hospitals and health care organizations, if they applied to the Internal Revenue Service for the exemptions, as St. Clare’s did in the 1990s.
Three legal cases involving similar pension failures at religiously-affiliated health care organizations — and questions about whether the IRS should have granted the exemptions — are headed to the U.S. Supreme Court in the spring, after federal appeals courts in three parts of the country found the plans should have been bound by federal pension guarantees. What bearing a court ruling would have on the St. Clare’s situation was unclear.
The hospital’s pension plan had $34 million in assets as of Dec. 31, 2015, according to the letter sent to employees, and a deficit — the difference between its assets and its estimated future payment obligations — of nearly $35.4 million.
As part of the arrangement, when Ellis took over St. Clare’s, which had an unfunded pension even then, the state Health Department paid the pension fund $28.5 million. St. Clare’s officials have said that money was invested, but the investment was badly timed, given the market crash in the fall of 2008 and payment demands on the fund.
Many pension participants said the letter in October was the first they had heard about a problem, though St. Clare’s officials said the information was available in annual reports, and the letter was sent when it became clear the fund was going to run out of money.
“We took this step to provide participants with as much notice as possible — nearly 10 years — to make appropriate decisions regarding retirement,” St. Clare’s Corp. board Chairman Joseph Pofit said in a statement in January. “Given that the hospital was closed in 2008, there has been no way to make up the deficits in the plan.”
The state Health Department said in January that the 2008 payment met the state’s financial obligation. The hospital consolidation has resulted in better, more-efficient health care in Schenectady County, a statement said.