New Orleans Hospital Corporation Agrees To Guarantee Pensions
Christian Health Ministries in New Orleans, La., has reached a voluntary agreement with the U. S. Department of Labor to guarantee more than $7 million in annuities purchased from defunct Executive Life Insurance Company of California.
Voluntary agreements may be entered into when the parties have cooperated with the department and are willing to take appropriate actions to assure continued compliance with federal pension law.
"The hospital has fully cooperated by making discretionary payments for shortfalls in the pension benefits promised to its workers," said Secretary of Labor Robert B. Reich. "This agreement guarantees that benefits shortfalls are consistently funded."
Christian Health Ministries (CHM) is a non-profit hospital corporation which operates Mercy Baptist Medical Center. It was previously known as Southern Baptist Hospital before merging with Mercy Hospital in 1994.
Southern Baptist Hospital of New Orleans sponsored a defined benefit plan for 1,543 participants before the plan was terminated in 1988. Annuities were purchased in 1989 from Executive Life to provide pension benefits for participants of the terminated plan. The hospital received more than $3.7 million in surplus assets after the plan was terminated.
After Executive Life was placed in receivership by the State of California in 1991, retirees received only about 70 percent of their monthly annuity benefits when. But the hospital made discretionary payments to make up for shortfalls in the pension benefits.
Under the terms of the state's rehabilitation plan for Executive Life, Aurora National Life Assurance Co. is now carrying on the insurance business of Executive Life. The rehabilitation plan gave participants the right to choose whether to receive future monthly annuity benefits from the successor insurance company Aurora or accept lump sum payments based on their proportionate share of the Executive Life estate.
Southern Baptist has adopted a defined benefit plan that, if approved by the Internal Revenue Service, will pay participants who chose Aurora's annuity the entire benefit shortfall. The hospital agreed to make the contributions over five years.
The voluntary agreement, signed Jan. 17, is a cooperative effort between Southern Baptist and the federal government. The case resulted from an investigation by the Dallas office of the department's Pension and Welfare Benefits Administration into alleged violations of the Employee Retirement Income Security Act. |
Deferred Annuity
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