PBGC Takes Over Bankrupt Verity Health System’s Pension Plans

Pension insurance to assume benefit payments for 8,000 members.

The Pension Benefit Guaranty Corporation (PBGC) is assuming responsibility for two pension plans sponsored by El Segundo, Calif.-based Verity Health System, which has filed for Chapter 11 protection.

The two plans, the Verity Health System Retirement Plan A and the Verity Health System Retirement Plan Bcover nearly 8,000 people. The Verity Health System Retirement Plan A is underfunded by approximately $306 million, while the Verity Health System Retirement Plan B is underfunded by approximately $2.8 million.

PBGC will pay pension benefits earned by Verity’s current and future retirees up to the legal limits.

According to the PBGC, both Verity Health System pension plans are covered under Title IV of ERISA. However, because neither pension plan has been covered by PBGC’s insurance program for five years, payments will be affected by the five-year phase-in limit on PBGC’s benefit guarantee for new and newly covered plans that begins with the date of coverage.

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Plan members who are already receiving a pension from Verity Health System will continue to receive payments without interruption in the annuity form chosen at retirement. However, in several months, the PBGC will adjust benefit payments to an estimate of the amount required by law. For those not yet receiving a pension, the PBGC will pay an estimated benefit when they become eligible and apply for pension benefits.

According to the PBGC’s preliminary analysis, almost everyone covered under the pension plans will receive reduced benefits because the pension plans were insured by PBGC for less than three years when the company entered into bankruptcy. The PBGC will pay retirees estimated benefits while it completes the auditing, actuarial and legal work necessary to determine exact benefit entitlements under the law.

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No. 1 Economy-Affecting Trend for the Next 30 Years: Aging Populations

The graying of many nations tops other big issues, like climate change, Investcorp survey of institutional investors says.

Forget climate change and international trade. The aging populations globally form the trend that will have the most impact on the world-wide economy during the next 30 years.

That’s the conclusion from a poll of 185 institutional investors, representing more than $10 trillion in assets. The top trend that 78% of them named, an aging populace, trumped the No. 2 trend, artificial intelligence (No. 2), climate change (No.3), urbanization (No.4), and trade (No. 5).

The survey was done by Investcorp, a provider and manager of alternative investing products. That’s fitting. One notable trend not in the poll: Alts are gaining an increasing share of the institutional dollar, as professionals seek to find an uncorrelated asset class to diversify from traditional stocks and bonds.

The institutions are more likely to bet on the baby boom generation via private markets than in public ones, with private equity and real estate their largest target areas. Perhaps this means they are interested in buying out boomer-led companies and purchasing boomers’ homes as they downsize or die. This trend, the respondents indicated, will peak in 2030 to 2032, when the oldest boomers are between ages 84 to 86 and the youngest 66 to 68.

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The over-65 crowd in the US is expected to double during the next three decades, to 1.6 billion people, according to the Census Bureau. Japan is now the oldest nation and will continue to be in 2050. By region, Europe is the oldest and will stay that way over the next 30 years. Africa is the youngest, with just 3.5% of the population 65 and over.

Declining fertility rates have been the main catalyst for an aging population’s prominence on the economic scene, but birth levels vary by region and nation.

 Related Stories:

Aging Populations Continue to Burden World Economies

Report: Population Aging, Inequality to Hit Younger Generations Hardest

Investing in Demographics

 

 

 

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