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Benefits January 13, 2015
Health System’s Plan to Terminate Pension Halted
A judge has issued multiple restraining orders to prevent the Singing River Health System from terminating its pension plan for employees.
Reported by Rebecca Moore
Chancery Judge Neil Harris of the 16th Judicial Chancery District in Mississippi granted another restraining order that prevents Singing River Health System’s Board of Trustees from terminating its defined benefit plan for employees.
According to the Biloxi-Gulfport SunHerald, the request for a restraining order was the fifth one made by a health system retiree. Each temporary restraining order remains in force for 10 days. Each time a retiree files for another restraining order, health system attorneys remove the case to the U.S. District Court for the Southern District of Mississippi, claiming federal rules govern the pension plan.
The defined benefit pension plan was closed to new employees in 2011, and new employees are offered a defined contribution 403(b) plan. The pension plan has more than $136 million in assets, but anticipated future need is at more than $285 million.
Employees were sent an email in November offering them the option to receive a lump sum payment equal to their total prior contributions, with interest calculated at the three month treasury rate over the life of their contributions. They were also presented with the option of rolling their prior contributions into a new defined benefit pension plan that will provide a defined benefit which is lower than the one in the old plan. At the time, health system officials said they did not know if the benefits of retirees currently receiving benefits from the plan would be cut.
The news report says Harris has been unable to delve into any of the cases to determine whether he should issue a more permanent restraining order and order the health system to produce financial records that might show why the pension plan is only 48% funded. The health system’s board voted November 20 to terminate the plan, prompting the retirees’ lawsuits.
Attorneys for the retirees said they intend to keep filing lawsuits for Chancery Court restraining orders until U.S. District Judge Louis Guirola decides whether pension lawsuits will be heard in state or federal court.