The federal organization responsible for safeguarding pension plans in the private sector has made a commitment to guarantee benefits for the many workers impacted by the shutdown of St. Joseph’s Health Services in Rhode Island. Stephen F. Del Sesto, the receiver appointed by the court for the abandoned pension plan of St. Joseph’s, announced the Pension Benefit Guaranty Corporation (PBGC) commitment on Monday. “By issuing this notice,” Del Sesto noted, “the PBGC has pledged to cover and ensure the payment of benefits.” Although the official announcement did not detail the extent of statutory coverage offered by the PBGC, Del Sesto anticipates that such information will become available in the near future.
“This represents a significant triumph for the pension beneficiaries of the plan,” remarked Del Sesto, emphasizing that it provides the assurance that countless pension holders have been longing for since he took on the role of receiver. The pension crisis at St. Joseph’s Health Services emerged in August 2017 when the managers of the pension fund petitioned the court to enter receivership and sought approval for a sweeping 40% reduction in benefits for the 2,700 present and former employees qualifying for pensions.
Three years after it was sold to Prospect CharterCare in 2014, the $95 million pension fund was placed into receivership. In 2018, Superior Court Judge Brian Stern appointed Del Sesto as the receiver, rejecting the proposed cuts and accusing Prospect CharterCare and Bishop Thomas Tobin of hiding financial issues related to the pension fund in order to avoid regulatory scrutiny during the acquisition of the company controlling Roger Williams Medical Center, Fatima Hospital, and the now-defunct St. Joseph Health Center.
Pensions secured for St. Joseph’s employees
A series of lawsuits were launched against 14 parties, resulting in close to $50 million in recoveries. This included an agreement reached in September 2023 where specific parties tentatively consented to inject $2.5 million into the pension plan, pending PBGC’s approval.
The recent pledge by PBGC effectively resolves the lengthy legal and financial ambiguities, ensuring that former employees of St. Joseph’s Health Services will receive the pensions they were promised. The Pension Benefit Guaranty Corporation (PBGC) is stepping in to take responsibility for the St.
Joseph Health Services of Rhode Island Retirement Plan, as announced by the agency. This plan consists of 2,500 participants and is approximately 35% funded, boasting $47 million in assets against $135 million in benefit obligations. This funding deficit amounts to an underfunding of $88 million.
The plan sponsor, St. Joseph Health Services of Rhode Island, divested almost all its operational assets in 2014. By 2017, the plan found itself in state court receivership.
The intervention of the PBGC guarantees that the pension benefits for participants will be honored despite the underfunding and financial challenges faced by St. Joseph Health Services.
