JACKSON COUNTY, MS (WLOX) - Hundreds of Singing River Health System employees found out they won't be getting the kind of retirement benefits they thought they would. Hospital officials notified employees of upcoming changes to the existing pension plan.
CEO Kevin Holland said the changes aren't something Singing River wants to do, but rather what it has to do. The $18 million to $20 million a year it takes to fund the current pension plan is more than the company can afford. He said keeping the status quo is a threat to the hospital system's survival.
There are about 400 employees actively enrolled in the current pension plan. With the stress from mounting expenses, Singing River turned to financial experts for a cure.
"So essentially their recommendations were look at some options to change the plan," said CEO Kevin Holland.
Details are still being worked out, but hospital officials say employees should expect two new options for retirement: either a defined benefit plan, or a defined contribution plan.
"A defined benefit plan basically guarantees a certain amount at the time of retirement," said Holland. "A defined contribution plan, basically you're contributing into a retirement account that is invested over a period of years and at the end of your employment years, whatever is in that account is what you have for retirement. Defined contribution plans are what most companies have."
Officials said they realize that people have different retirement needs, so they wanted to give employees options.
"Because we feel like it's the right thing to do and it's what we want to do," Holland said. "We believe that giving them that choice will, hopefully, allow them to feel like they've got some options. I can't tell you how much we care about our employees and how hard this has been. This has been a very difficult time."
One option is continuing with having a pension plan, but with a different retirement payout than the current pension.
"It would be at a lesser amount than the current plan, which pays out about 50 percent of an employee's annual salary if they've been with us for 30 years," said Holland. "Or, if they wanted to, they could take their contributions and roll it over into a defined contribution plan, another form of a contribution plan. We will match their contributions to that plan going forward 50 cents on the dollar up to six percent."
Executives said these have been difficult decisions to make, but they can't risk the entire health system flatlining.
"We would not be doing this if we didn't feel like we had to and we have a tremendous responsibility to our employees," said Holland. "Something that we all feel very passionately about, but we also have a responsibility to be able to sustain and provide for the financial viability of this healthcare system for the community that we serve.That is a very strong part of our mission and we've got to both be sustainable for the future and create a great environment."
Singing River Health System has about 600 people who have already retired. Company officials say since they haven't communicated with those retirees yet they want to wait before talking with the media about what will happen with that.