Benefits December 3, 2024

PBGC to Pay Benefits for St. Joseph Health Services Retirement Plan

The former Rhode Island church plan was underfunded by $88 million and was unable to fund the minimum required pension contributions.

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The Pension Benefit Guaranty Corporation announced Tuesday that it will take over the St. Joseph Health Services of Rhode Island Retirement Plan, paying pension benefits to about 2,500 current and future retirees.

The PBGC estimates that the former church plan is 35% funded, with approximately $47 million in assets and about $135 million in benefit liabilities. The plan was underfunded by $88 million, according to the announcement.

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St. Joseph Health Services was a not-for-profit corporation that operated a hospital in Providence, Rhode Island. The PBGC is stepping in to take responsibility for the plan because St. Joseph Health Services has ceased operations and is liquidating. According to the PBGC, the plan has been unable to fund the minimum required pension contributions, and the pension plan is significantly underfunded.

The sponsor of the plan, St. Joseph Health Services of Rhode Island Inc., sold substantially all of its operating assets in 2014 to Prospect CharterCare. In 2017, the plan was placed into state court receivership. The plan was originally established as a Catholic church pension plan and, as such, was not covered by PBGC insurance.

The plan became covered by the PBGC following the sale of hospital, the appointment of a receiver and a determination by the IRS that the plan was tax-qualified as of 2017.

Rhode Island Superior Court Judge Brian Stern appointed Stephen F. Del Sesto as the receiver, with lawyer Max Wistow named special counsel.

Del Sesto had previously filed a lawsuit against Prospect CharterCare on behalf of the plan and its participants in 2018, alleging that at a certain point, the plan lost its church plan status as defined by the Employee Retirement Income Security Act and was required to adhere to ERISA funding rules.

The parties eventually reached a settlement in 2021, and $30 million was paid to Prospect CharterCare. The lawsuit stated that the settling parties recognized that the claims were “disputed and uncertain” and that the settlement was reached amid a desire to avoid the costs and risks associated with uncertain litigation. Neither party admitted any fault or liability in entering into the agreement.

Retirees currently in the plan will continue to receive benefits without interruption, and future retirees can apply for benefits as soon as they are eligible. The PBGC is currently working with the court-appointed receiver to execute a PBGC trusteeship agreement, at which point the PBGC will become responsible for the plan and pay the pension benefits to current and future retirees up to the legal limits.

Until the trusteeship agreement is executed, the PBGC advises plan participants to continue to contact the receiver with any benefits-related questions.

Deals and People December 3, 2024

Trump Selects Kevin Hassett to Lead National Economic Council

Hassett is known in the retirement industry for a paper he co-authored that expressed support for creating something similar to the federal Thrift Savings Plan for private sector workers.

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President-elect Donald Trump announced his intention to appoint economist Kevin Hassett as director of the National Economic Council, replacing current director Lael Brainard, when Trump takes office on January 20, 2025.

As director, Hassett would work closely with the secretary of the treasury to implement Trump’s economic policy objectives, which have largely been centered around cutting taxes, increasing tariffs and expanding energy production.

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Hassett previously served as chair of the Council of Economic Advisers in Trump’s first administration from 2017 to 2019 and served as a senior adviser to Trump during the early stages of the COVID-19 pandemic in 2020. He is currently a distinguished fellow in economics at the Hoover Institution, a public policy think tank. While serving in the prior Trump administration, Hassett defended Trump’s tax cuts and trade policies but also acknowledged that tariffs can weaken economic growth.

Prior to working for Trump at the White House, Hassett was an economist at the American Enterprise Institution and served as a senior economist for the Federal Reserve Board of Governors.

Created in 1993 by executive order, the NEC has four key functions: to coordinate policymaking for domestic and international economic issues; to give economic policy advice to the president; to ensure that policy decisions and programs are consistent with the president’s economic goals; and to monitor implementation of the president’s economic policy agenda.

Hassett co-authored a 2021 white paper, along with Teresa Ghilarducci of The New School, arguing that the current defined contribution retirement system favors higher-earning workers by being based on “tax benefits through deductions, as opposed to credits or direct matches.” Hassett and Ghilarducci expressed support for the Retirement Savings for Americans Act of 2023—legislation that would give American workers access to portable, tax-advantaged retirement savings accounts, with federal matching contributions for certain low-and middle-income workers.

The bill has bipartisan support and was introduced by Senators John Hickenlooper, D-Colorado, and Thom Tillis, R-North Carolina, and Representatives Terri Sewell, D-Alabama, and Lloyd Smucker, R-Pennsylvania. It has not yet been passed by the House or Senate.

Ghilarducci says Trump “could not have chosen better in selecting [Hassett] as his chief adviser.”

“[Hassett] is not an ideologue; rather, [Hassett] is a highly talented economist who approaches strategy and policy puzzles with a commitment to finding practical, inclusive solutions,” Ghilarducci says. “During our collaboration on addressing the gapping retirement wealth inequality, I’ve come to appreciate Kevin’s deep concern for the economic security of working people—a security that depends heavily on Social Security and bold, forward-looking pension reforms.”

Ghilarducci and Hassett’s white paper was funded by the Economic Innovation Group, of which Hassett is a founding co-chair and current member of the economic advisory board.

“Kevin Hassett is a phenomenal choice to lead the National Economic Council,” said EIG President, CEO and Co-Founder John Lettieri in a statement. “The country will be fortunate to once again have the benefit of his deep experience and policy acumen in the White House. Throughout his career, Kevin has been a tireless advocate for policies that spur economic growth and uplift left-behind workers and communities.”

Trump also recently announced his plans to nominate Representative Lori Chavez-DeRemer, R-Oregon, as secretary of labor and hedge fund manager Scott Bessent to be secretary of the treasury. The cabinet positions, unlike the NEC position, need to be confirmed by the Senate after Trump re-takes office in 2025.

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