The PBGC will cover the pension benefits of nearly 800 former employees of the Hospital Center at Orange, after a change in legal status.
“We found a way that this plan could be covered. That's our mission,” said PBGC spokesman Marc Hopkins.
Before closing in 2004, the Orange Township, N.J., hospital became affiliated with Cathedral Healthcare System Inc. and was deemed a church plan in 2003 by the Internal Revenue Service, which made it exempt from ERISA and no longer under the control of the Pension Benefit Guaranty Corp.
The announcement Friday that the PBGC would assume responsibility for the plan was made possible after PBGC officials worked closely with the Pension Rights Center and former hospital employees to have the IRS revoke the church plan status. “It's been a 10-year journey for us. We're so grateful,” said Mary Rich, former hospital vice president, in an interview.
Pension Rights Center spokeswoman Nancy Hwa said her group will continue to scrutinize the practice. “Even though the HCO is the most egregious abuse of the church plan exemption, we're still concerned about other so-called church plans where the employees and retirees are not protected,” said.
PBGC officials estimate that as of the plan's January 2009 termination date, it had $11 million in assets to pay $41 million in benefits. The PBGC will cover the $30 million shortfall.
