A weaker investment market has caused Erlanger Health System's pension to drop to a funding level of 48.7% compared to more than 50% funding in November 2021.
Gregg Gentry, Erlanger's chief administrative officer, gave an update on the status of the health system's pension fund during the Erlanger board's November meeting, saying the fund's investment managers and advisers reported "just a slight decrease" in funding quarter over quarter.
While many Americans' retirement savings and balances have taken major hits in 2022, Erlanger officials have said in the past the investments that help fund the hospital's pension are much more conservative and therefore less likely to lose money when compared to investments for other workplace retirement plans, such as 401(k) programs.
In September 2020, the Erlanger Board of Trustees voted to suspend lump-sum payments from the hospital's pension until it was brought to an 80% funding level. At the time, trustee Ken Conner estimated it would take roughly seven to 10 years -- or possibly longer -- to reach 80% funding given that the plan was 36% funded, or $83.5 million underfunded, at the end of the fiscal year 2020.
The pause has affected Erlanger employees hired before 2010, when the health system stopped offering a traditional pension in favor of a defined contribution plan, akin to a 401(k).
Before the pause, the option for retired employees to receive their pension benefits in an up-front, lump sum was by far the most popular choice, but board members said allowing large chunks of money to be withdrawn from the fund is unsustainable until the pension reaches 80% funding. Erlanger employees who are vested can still receive their pension benefit in monthly payments.
Erlanger's increased contributions to the fund combined with a strong portfolio return in 2021 made it more likely the option for employees to collect their benefits as a lump sum may come sooner than original estimates, but 2022's poor market performance has for the time slowed progress.
Contact Elizabeth Fite at efite@timesfreepress.com or 423-757-6673. Follow her on Twitter @ecfite.