Parrish Medical Center Pension Plan Termination Update
- Category: Community, Parrish Medical Center
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TITUSVILLE, FLA. (May 16, 2024)—The North Brevard County Hospital District d/b/aParrish Medical Center (PMC) Pension Plan was frozen effective September 30, 2016. This meant thatemployees vested, as of September 30, 2016, in the PMC Pension plan stopped accruing anyadditional dollars towards this plan. The employee’s value (earnings and years of service) in thePension Plan was, in effect, frozen-in-time, as of September 30, 2016.
On October 1, 2016, PMC transitioned to a Defined Contributions Plan (403b). At that time employees began enrolling in PMC’s 403b Plan (similar to a 401K) which includes an employer match of up to three percent (3%). Since the inception of the 403b Plan, PMC has provided more than $5 million in matching funds; approximately $1 million every year beginning January 2017. The amount of this year’s match will be announced later this year (no later than September 30, 2024).
In 2023, the Parrish Medical Center Board of Directors adopted a resolution to terminate its frozen pension plan effective September 30, 2023. The termination process, as outlined within the Plan description document, Article IX, “Amendment and Termination,” took several months to complete. PMC engaged the support of GrayRobinson Pension Attorney Rick Burke and USI Consulting Group (USICG) to facilitate, with Foster & Foster (Plan Actuary), the termination process in accordance with all governing regulations, rules, and laws. After satisfying all Plan obligations, the PMC Pension Plan will cease to exist.
Florida Today reporter Tyler Vazquez wrote in his 2023 article titled, Parrish Medical Center to make one-time cash payment to retirees as it changes pensions, “The move by Parrish is not unusual in the current corporate retirement landscape. The number of pension plans offering defined benefits – which offer regular monthly payouts – plummeted by about 73% from 1986 to 2016, according to the Department of Labor's Employee Benefits Security Administration. Many of those companies over past decades have made moves similar to Parrish, offering lump-sum payouts to beneficiaries who must then go seek out new retirement plans on the open market.”
What may be unusual, in PMC’s case, is that the decision to terminate was not because the Plan was underfunded, which is often the case with the few remaining active Pensions in the U.S. In fact, PMC’s Plan was more than 100% funded and every eligible employee will receive 100% of their earned benefit.
Another important difference between PMC’s Pension Plan and that of other public entities is that neither taxpayers nor employees contributed anything to the PMC Pension Plan. It was 100% funded by PMC alone. PMC also paid all Plan expenses until the Plan froze in 2016.
The reason for the Plan being well managed, since its inception in 1972, is attributed to the Pension Committee structure and processes. The Pension Committee meetings remain open to the public and the committee, then and now, includes a mix of community and employee representatives who are supported by legal, financial, and actuary experts. The meetings are publicly noticed within Florida Today newspaper and online at parrishhealthcare.com.
PMC’s Pension included $63,316,587 in assets and 617 total eligible beneficiaries. Of the 617 eligible beneficiaries, 128 were in active retirement status, and of those, 110 were transitioned to a new payor of their retirement benefits, while 18 decided to receive lump sum payment. The remaining 489 beneficiaries include a combination of active employees and past-employees (termed-vested) that will receive lump sum payouts of which they can elect to receive in cash or to rollover into an IRA or other investment account of their choice.
The original deadline for employees to submit their lump sum election was May 14, 2024; however, in response to employee feedback asking for more time to decide, the Board of Directors approved an extension of the election window to June 30, 2024.
Financial advisors have been made available, at no cost, to employees to further empower them to self-direct what to do with their money and to support them through the process.
According to the financial advisors, rolling the money into an investment account is highly encouraged. Individuals receiving the lump sum payment now have the opportunity to make their money grow; money that was sitting idle since 2016.
Should someone not respond or fail to submit their election form by June 30, 2024, his/her lump sum will be automatically rollover into an IRA account on their behalf, at which time they will have full access to their account to manage moving forward.
Parrish Medical Center throughout the process has developed and updated a Frequently Asked Questions (FAQ) document. The PMC Pension FAQ and the Plan document publicly available on parrishhealthcare.com/news/PMCPensionPlan.
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