A retirement plan meant to continue paying St. Clare's Hospital retirees until at least 2024 will be terminated by January 2019.
The information came in a letter sent to the retirees earlier this month, blindsiding many, one retired employee said.
According to the letter, a lack of income coming into St. Clare's Corp. is forcing the organization to terminate the plan early, even though the plan was originally supposed to provide for retirees for approximately another decade.
"We regret that termination of the plan is necessary, and we recognize the difficulty that [it] is likely to present for plan participants and their beneficiaries. There are simply not enough assets in the plan to provide the benefits to all current and future participants as the plan had contemplated prior to St. Clare's Hospital being forced to close," the letter, dated Oct. 11, read.
The Schenectady hospital ceased to exist as an independent entity in 2008, when Ellis Hospital absorbed it to become what is now known as Ellis Medicine.
The old St. Clare’s campus was renamed the McClellan Street Health Center and was converted to a nursing home and outpatient care/short-term rehab facility.
In early 2017, the 1,129 retirees or future retirees vested in the plan received written notice that the money to pay their benefits would run out somewhere between 2024 and 2028.
While most pension benefits are at least partly guaranteed by the federal government, church-owned entities can seek exemption from the guarantees and reporting requirements of the federal Employee Retirement Income Security Act. St. Clare’s, which was operated by the Roman Catholic Diocese of Albany, sought and received the exemption in the 1990s.
With the hospital no longer operating, there is no source of money to replenish the pension fund, which is gradually depleting itself with payments to retirees.
St. Clare's Corp. Board President Joseph Pofit confirmed in an email on Sunday that a letter had been sent in October to notify retirees of the termination of the plan.
"If the pension plan were to be continued without changes," Pofit said, "actuarial estimates projected that the plan would run out of money within 10 years, leaving all participants, including those already retired and receiving monthly pension checks, with no further payments. By terminating the plan now, current beneficiaries will be assured of receiving payments for the rest of their lives, although at reduced amounts."
According to Pofit, participants in the plan and their beneficiaries who have been receiving benefits since Nov. 1, 2015, or were 62 years old by that date, will receive guaranteed monthly payments for the rest of their lives, though at a reduced amount, beginning in February 2019.
Previous: Former St. Clare's employees to meet on endangered pension plan, May 8, 2018
If they choose, Pofit continued, those participants and beneficiaries can opt for a lump sum distribution that would be equivalent to the total lifetime monthly payments they would have received based on actuarial calculations. Those who were not age 62 or older on Nov. 1, 2015, Pofit said, will receive no payments.
Lori Daviero, a retired radiologic technologist who has been working with a group of fellow retirees to save their pension plan, said the letter was sent to over 1000 retirees, all of whom were "blindsided" by the plan termination.
"That's a good word for it," she said when reached by phone on Sunday. "We were blindsided. No one knew anything about it."
Everyone who received the letter, Daviero said, will be hurt by the plan's termination. The decision of the board to separate the pension receivers into two groups — those who turned 62 prior to 2015 who will continue to receive monthly payments, and those like Daviero, who just recently turned 62, who will not receive monthly payments— was a shocking one.
"Some people have 45 years of service and aren't 62," she said.
While Daviero said she has asked to approach the board several times over the last year with the intention of working together to find a way to save the pension plan, the only response she received from the board was that there was no way to change the contract.
"All of a sudden, this year, they change it," she said, noting that many former hospital employees were only just beginning to grapple with the fact that in ten years their payments might stop.
At this point, Daviero said, she isn't sure what the next steps are. Litigation could cost upwards of $500,000, she said, which is money her group does not have to spend.
According to Daviero, she and other retirees are still working with David Pratt, an Albany Law School professor who has been assisting the group for free in finding ways to protect their payments.
She said the plan now is to consult with Pratt to figure out their options.
"We are going to talk with him to see what our options are, if there are any," Daviero said. "We're going to fight until the bitter end. And even if we don't win, at least we'll go down fighting."
Correction 4:50 p.m.: An earlier version had an incorrect termination date. The correct termination date is January 2019