Hospital Reaches Settlement With Pension Plan Participants

The case is among a number filed that challenge the “church plan” status of a health care entity’s retirement plan.

A federal judge has preliminarily approved a settlement agreement between participants of the St. Joseph’s Hospital and Medical Center pension plan and St. Joseph’s Hospital.

As with many similar complaints, the lawsuit challenges whether the plan was really a “church” plan and not subject to Employee Retirement Income Security Act (ERISA) funding rules.

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In the order for preliminary approval, a judge for the U.S. District Court for the District of New Jersey certified a class, or plaintiffs. The settlement agreement says, “Nothing herein shall be construed as an agreement that the Plan is not properly treated as a Church Plan or that the Plan is subject to ERISA.” In spite of this, the terms of the agreement include many ERISA-like provisions.

Under the terms of the agreement, the defendants are obligated to contribute an aggregate amount of $42.5 million to the plan no later than 60 days after the agreement is executed or at any time prior. They may contribute that sum either directly to the plan or to an escrow account and then transfer these proceeds—including interest—to the plan 45 days after the agreement becomes final.

Additionally, at their discretion, the defendants may make further contributions to the plan at any time.

If, during the seven years after the agreement becomes final, the plan’s trust fund becomes insufficient to pay benefits as they are due, the defendants will need to shore up the trust fund so the benefits can be paid. In the event of a plan change such as a merger or consolidation during that time, participants and beneficiaries will be protected by entitlement to the same, or greater, accrued benefits under the terms of the plan as before. St. Joseph’s may amend or terminate its plan at any time, provided this will not result in the reduction of any participant’s accrued benefits as determined by the plan document.

Should the plan at some point be determined to fall under ERISA, it will then need to comply with the act’s applicable provisions.

NEXT: Plan administration terms  

Contemporaneous with plan amendments that will close and freeze the plan on or before December 31, 2018, the plan administrator will need to establish procedures concerning plan administration and notices, as set forth in the settlement agreement. At the defendants’ sole discretion, any and all reporting and disclosure to plan participants and/or beneficiaries may be accomplished via electronic dissemination, by electronic posting on defendants’ intranet site or via hard copy. If a participant requests a disclosure by hard copy, the plan administration will provide it within a reasonable time.

The plan documents will need to add provisions for taking any of the following actions that the documents, as of yet, don’t include: designate a named fiduciary; describe the procedure for establishing and carrying out the current funding policy and method; describe a procedure for allocation of administration responsibilities; provide a procedure for plan amendments and identifying a person(s) with authority to make such amendments; specify the basis on which payments are made to and from the plan; and provide a joint and survivor annuity payment option for participants and their spouses.

In addition, by the close of 2018, the plan administrator or its designee will need to have prepared a summary plan description (SPD) comprehensible to the average participant. The settlement agreement spells out in detail what the SPD should include.

For current and former employees, the plan administrator will need to prepare pension benefit statements, as it does now, distributing those electronically or in hard copy, at least once every three years. Other participants and beneficiaries could make a written request for a copy of a pension benefit statement, to be provided within a reasonable time, in either format, at St. Joseph’s discretion.

Millennials Suffering From Financial Anxiety

A variety of financial obstacles ranging from sticking to a budget to saving for the future are keeping Millennials up at night, according to a study by Wells Fargo.

Millennials will make up 75% of the work force by 2025, and $30 trillion in wealth may pass down to them, according to projections by Wells Fargo Asset Management. However, the firm also found that many in that group are still financially dependent and are seeking help to overcome anxieties about money.

A recent survey by Wells Fargo found the Millennial generation’s top 3 financial intimidators include saving for the future, knowing how to invest money and sticking to a budget. However, 77% lack a financial adviser. Of this group, 39% said they wanted one.

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But many Millennials are leery of approaching advisers. For example, seven out of 10 said the Great Recession made them skeptical of “stock market experts.” Still, 74% said it would be easier to stomach the ups and downs of the market if their investments made a positive impact on the world. In fact, the survey found that some are motivated to use their money toward that type of goal.

These sentiments are reflected in other studies that indicate heightened Millennial interest in environmental, social, governance (ESG) funds. These vehicles invest in companies screened for engaging in positive ESG practices through their business. Wells Fargo’s survey found that, if given $1,000, 86% of Millennials would be motivated to invest that money in a company that makes the world a better place through its products.

Still, some in this generation would need to overcome a wealth of financial hurdles before they can begin investing. Wells Fargo found that 69% want to get over their anxieties about money. And, even though 83% said “they play an active role in their financial lives,” only 68% of these feel in control.

In addition, many studies indicate Millennials are particularly burdened by student loan debt, and this is getting in the way of saving for retirement. Taken together, these issues can substantially impede the future financial wellness and capacity to create wealth for a large portion of the Millennial population. Considering the group’s potential footprint in the work force, these trends can have significant effects on the American economy for the long term. But Millennials are also willing to change if given a nudge in the right direction.

Wells Fargo concludes, “The Millennial financial mindset may be strained by anxieties and intimidations, but it is uplifted by a desire to change.”

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