TAMPA, Fla.- Aspirin anyone? BayCare Health Systems is taking its member hospitals' unrelated retirement plans, with more than $300 million in assets, and merging them into three new defined contribution plans with one semibundled provider.
BayCare was formed by the merger of nine not-for-profit hospitals, each with its own retirement program, in 1997. A single retirement program is needed so employees can transfer more easily among the hospitals, said Craig Brethauer, vice president of team resources, BayCare Health Systems.
Right now, the main retirement plans are a profit-sharing plan, a money purchase plan and two cash balance plans. The cash balance plans, offered by two Catholic hospitals, have $95 million in total assets.
"We originally thought we would use cash balance plans because two hospitals were using cash balance, but after all of the press about cash balance plans we decided to move to a defined contribution plan," Mr. Brethauer said.
When the new program is implemented Oct. 1, cash balance plan participants will have a one-time choice of staying in those plans or moving to the new defined contribution plans, he explained. All new employees will go into the new plans, for which Fidelity Investments, Boston, is the provider.
Those who remain in the cash balance plans will be able to participate in the 401(k), but without the employer match, Mr. Brethauer said. The two Catholic hospitals also have a $130 million 403(b) plan. The assets in that plan, handled by six service providers, will be frozen. Employees can transfer their money into a new Fidelity-run 403(b) plan, but their vendor may assess surrender charges, he said.
Core and 401(k)
Two of the new defined contribution plans will consist of an employer "core" plan and a 401(k) plan. Six of the current plans will be merged into the two new plans, said Louis Koechlein, director of compensation and benefits.
The core plan will have a guaranteed employer contribution of 2%, eligibility after one year or 1,000 hours, and a five-year cliff-vesting schedule. Employees must be employed on Dec. 31 to receive the company's contribution. The 401(k) plan has immediate eligibility, an employer match of 50% on the dollar up to 6% of pay, and 100% vesting of employer contributions in five years, Mr. Brethauer explained. Employees must be employed on the last day of each quarter to receive the match, he added.
The core, 401(k) and 403(b) plans will have the same set of investment options. They are: Fidelity's Spartan U.S. Index, large-cap core, Blue Chip Growth, Low Priced Stock, U.S. Bond Index, Spartan International Index, Diversified International, Extended Market Index, Retirement Money Market and five Freedom lifestyle funds; Morgan Stanley Dean Witter Institutional Value Equity B and Small Company Growth Funds; and PIMCO Total Return Fund, Ms. Koechlein said.
BayCare's investment committee intends to revisit the plans' investment options within a year and might add a self-directed brokerage option in the future, Mr. Brethauer said.