Editor's note: This story was updated at 10 a.m. on Jan. 17, after St. Clare's Hospital responded to requests for comment.
SCHENECTADY — The pension plan covering workers at the former St. Clare's Hospital has notified more than 1,100 participants that, based on current projections, it will run out of money to pay their retirement benefits in about another decade.
The update sent to 1,129 persons -- retirees or prospective retirees vested in the plan -- has created new worries for those who were told the plan would be adequately funded after the Catholic Church-affiliated hospital on McClellan Street was merged with Ellis Hospital under a state consolidation plan in 2008.
"I went from angry, panic, mad, determined," said Bonnie Benson, of Charlton, a 74-year-old who worked 37 years in the St. Clare's business office before retiring shortly before the merger. She didn't want to disclose her pension payment but called it "a good part of my retirement income."
"My thought is ... this (merger) was forced on the area by the (state) Berger Commission, and we were told it would be sufficiently funded to meet its future needs," she said.
"I was planning on it. I was told it was going to be there," said a former St. Clare's administrative assistant who asked that her name not be used because she continues to work in health care and is within a few years of retirement.
While federal pension law guarantees future payments under most private pension plans, the St. Clare's plan is a "church plan" -- one affiliated with a religious organization, making it exempt from the guarantees and reporting requirements of the federal Employee Retirement Income Security Act. The exemption was originally intended for churches and their employees, but it has been expanded to cover many hospitals and other organizations that aren't primarily religious but that have a church affiliation.
Three cases involving similar pension situations at religiously-affiliated health care organizations are headed to the U.S. Supreme Court this spring, after federal appeals courts in three parts of the country found the plans should be bound by federal pension guarantees, because their purpose wasn't primarily religious.
"The Supreme Court's decision in these three cases will affect hundreds of thousands of current employees of hospitals, social services agencies, educational institutions and other religiously affiliated nonprofit organizations whose pension plans were not established by and are not backed by the church," said Karen Ferguson, director of the Pension Rights Center, a Washington D.C. non-profit that is working with some of the St. Clare's pensioners.
A key difference between the cases going to the Supreme Court and the St. Clare's situation, though, is that St. Clare's Corp. says it no longer has other assets to draw on, since it is now out of business.
According to the letter sent to 335 retirees or beneficiaries and hundreds of other future retirees, the plan will run out of money sometime between 2024 and 2028.
"St. Clare's Corp. will not to be able to make meaningful future contributions to the plan," the letter states. "The plan will not be able to pay benefits to participants after its assets have been exhausted."
The plan had $33,986,836 in assets as of Dec. 31, 2015, according to the letter, after it lost nearly $3 million for the year. Its deficit -- the difference between its assets and its estimated future payment obligations -- was $35,367,644.
"We have a lot of people for whom the pensions are very important," said David Pratt, a professor at Albany Law School who has consulted with some pensioners. "Right now, we have a situation where a lot of people are in jeopardy, and that concerns me. It's a complicated situation."
The takeover of St. Clare's by Ellis took place in 2008, following a report from the Berger Commission on ways to eliminate service duplication and increase efficiencies in the state's health care system. As part of the arrangement, the state Health Department paid the pension fund $28.5 million to make up for past underfunding.
The money was invested, and the investments were badly impacted by the stock market crash in the fall of 2008 and the the subsequent recession, St. Clare's officials said. But pension participants said the letter in October was the first they had heard about a problem.
"Why didn't they tell us something then, instead of waiting until 2016?" asked John Owens of Menands, a former vice-president of finance at St. Clare's.
St. Clare's Corp., in a statement issued Tuesday, said it has been informing participants in annual reports for a number of years that the plan was underfunded, and the October letter informed them that its assets totalled $33.9 million, though it needs $69.3 million to meet its obligations.
"We took this step to provide participants with as much notice as possible -- nearly 10 years -- to make appropriate decisions regarding retirement," said the statement from board Chairman Joseph Pofit. "Given that' the hospital was closed in 2008, there has been no way to make up the deficits in the plan."
The Pension Rights Center said it is looking at the situation to determine whether any other entity could be held responsible for covering the shortfall. Some of the pensioners have been in contact with Assemblyman Phil Steck, D-Colonie, who represents part of Schenectady.
Pratt, the Albany law professor, said it's possible that either Ellis or the state Health Department could be held responsible, since they have assets.
"Any litigation involving the old St. Clare's would be totally meaningless," he said.
Ellis Medicine did not respond to a request for comment. The state Health Department said it has already met its obligations under the Berger Commission findings.
"State funds invested 10 years ago have resulted in a higher quality, more cost-effective health care system for the residents of Schenectady County," said Health Department spokesman Ben Rosen. "Questions regarding the continued obligations of the employer should be directed to them."
Officials at the Roman Catholic Diocese of Albany, which maintains it is no longer connected to St. Clare's Corp. -- though they share the same Albany address -- weren't available for comment. Diocese offices were closed starting Friday because of the Martin Luther King Jr. holiday weekend.
Reach Gazette reporter Stephen Williams at 395-3086, [email protected] or @gazettesteve on Twitter.