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Archived News Release--Caution:
information may be out of date.
For more information call: (202) 219-8921.
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.
Archived News Release--Caution:
information may be out of date.
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