Pension Benefit Guaranty Corporation to cover pensions

The federal agency that protects private sector pension plans has agreed to guarantee payments to the thousands of workers affected by the closure of St. Joseph’s Health Services in Rhode Island. The Pension Benefit Guaranty Corporation (PBGC) commitment was announced Monday by Stephen F. Del Sesto, the court-appointed receiver for the orphaned St. Joseph’s pension plan. By issuing the notice,” Del Sesto said, “the PBGC has committed to covering and guaranteeing payment of benefits.” The official notice did not specify the level of statutory coverage that the PBGC will provide, but Del Sesto expects that information to be provided in the coming days. “This is a monumental win for the plan’s pension holders,” Del Sesto remarked, adding that it finally provides the certainty that the plan’s thousands of pension holders have been waiting and hoping for since his appointment as receiver. The St. Joseph’s Health Service pension crisis came to light in August 2017 when the pension fund managers asked the court to put it in receivership and approve a 40% across-the-board benefit cut for the 2,700 current and former employees eligible for pensions. The $95 million pension fund was placed in receivership three years after being sold to Prospect CharterCare in 2014. Superior Court Judge Brian Stern appointed Del Sesto as the receiver in 2018, objecting to the proposed cuts and accusing Prospect CharterCare and Bishop Thomas Tobin of concealing financial problems within the pension fund to shield their own liability from regulators during Prospect CharterCare’s acquisition of the company that owned Roger Williams Medical Center, Fatima Hospital, and the now-shuttered St. Joseph Health Center.

Pensions secured for St. Joseph’s employees

Multiple lawsuits were filed against 14 defendants, resulting in approximately $50 million in recoveries. This included a September 2023 settlement in which certain parties agreed, in principle, to pay $2.5 million into the pension plan, contingent on PBGC acceptance. The PBGC’s recent commitment essentially concludes these long-standing legal and financial uncertainties, ensuring that former St. Joseph’s Health Services workers will receive the pensions they were promised. The Pension Benefit Guaranty Corporation (PBGC) is stepping in to assume responsibility for the St. Joseph Health Services of Rhode Island Retirement Plan, the agency announced. The plan includes 2,500 participants and is approximately 35% funded, with $47 million in assets against $135 million in benefit liabilities. This funding gap leaves the plan underfunded by $88 million. The plan sponsor, St. Joseph Health Services of Rhode Island, sold nearly all its operating assets in 2014. By 2017, the plan had been placed into state court receivership. The PBGC’s involvement ensures that the participants’ pension benefits will be paid despite the underfunding and the financial difficulties faced by St. Joseph Health Services.