Benefits July 6, 2006

PBGC To Absorb NY Hospital's $29M Pension Shortfall

July 6, 2006 (PLANSPONSOR.com) - The Pension Benefit Guaranty Corporation said Wednesday it will take over $29 million deficit of a New York hospital's defined benefit plan, after it missed nearly $8 million in required contributions.
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According to a release, the Brooklyn, New York-based Victory Memorial Hospital Pension Plan covers about 1,200 current and former employees and retirees and has been frozen since 1997.

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The nation’s private sector insurer found that the plan would not be able to make payments because it was only 42% funded, with about $20 million in assets to cover nearly $49 million in promised benefits to its participants. The hospital’s last contribution was for the 2003 plan year, the release said.

The PBGC will pay monthly pension benefits to the plan participants.

According to the release, absorbing the plan will not have a material affect on the PBGC’s balance sheet because an estimate of the liability was included in the fiscal 2005 financial statements. The pension plan terminated as of September 15, 2005, and PBGC became trustee on June 15, 2006.

Victory Memorial Hospital retirees who draw a benefit from the PBGC may be eligible for the federal Health Coverage Tax Credit. Further information may be found on the PBGC Web site at

Compliance July 5, 2006

Conflict-of-Interest Ruling Prompts New Hearing in SD Pension Case

July 5, 2006 (PLANSPONSOR.com) - A case settled last week by California's 2nd District Court of Appeal that further defined the state's conflict-of-interest law may have bearing on an ongoing dispute over contested San Diego pension benefits, the judge handling the pension case said.
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California Superior Judge Jeffrey Barton said that the appeals court ruling   – which said the state’s conflict-of-interest law “must allow society to reverse the course and turn back the clock” – might affect his ruling on whether former San Diego pension officials broke the law by voting to approve a plan that allowed the city to put less money into the retirement system in return for larger pensions (See Six ex-SD pension Officials Bound Over for Trial).

The appeals court ruling was in favor of Carson Redevelopment Agency on its complaint to recover $850,000 from the owners of a housing complex. The money was paid to the owners through a public contract that was approved and signed only after they paid $75,000 in extortion money to the former mayor pro tempore of the City of Carson, according to news reports.

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The judges found a conflict-of-interest because the official voted to approve the agreement “based on his greed rather than on the due diligence and integrity he owed the city of Carson,” and they ordered the $850,000 be repaid.

According to the San Diego Union-Tribune, Barton called the attorneys handling the pension case back into the courtroom Wednesday for a hearing to discuss the matter.

City Attorney Michael Aguirre is trying to use the conflict-of-interest law to undo pension increases that were approved in 1996 and 2002, arguing that the boosts helped to underfund the city’s retirement system, the newspaper reported. But lawyers for the unions that stand to have their benefits rolled back say that it was the City Council and not the pension board that approved the labor contracts to increase retiree benefits (See San Diego’s Aguirre Demands Court Roll Back Pensions ).

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