The Erlanger Health System Board of Trustees voted Thursday to suspend lump sum payments from the hospital’s pension plan in an effort to strengthen the plan, which was about 36% funded – or $83.5 million underfunded – as of June 30.
Trustees passed a resolution that will immediately suspend the option for retired employees to receive their pension benefits in an up-front lump sum, which is the most popular option for receiving those benefits, upon retirement until the plan is 80% funded.
Instead, participants in the pension plan who retire before funding reaches the 80% mark must receive their benefits in monthly payments.
The change affects approximately 1,300 current employees and 1,400 former employees who are vested in the plan but not yet retired.
It does not affect Erlanger employees who were hired after June 30, 2009, when the health system stopped offering a traditional pension in favor of a defined contribution plan, akin to a 401(k) program. The newer plans for those hired after June 30, 2009, (approximately 5,300 Erlanger employees) are unchanged.