Sutter Health Contributes An Additional $53 Million To Fully Fund Its Employee Pension
Not-for-profit health network’s employee pension assets now exceed $852 million
SACRAMENTO, Calif., Feb. 24, 2005 – While the nation's Social Security, defined benefit pensions and retirement savings accounts such as 401k's are extraordinarily under-funded relative to their retirement promises, Sutter Health contributed another $53 million to the Sutter Health Retirement Plan to fully fund its employee pension obligations in 2004. Sutter made the sizeable investment in December of last year to ensure the future retirement security of 34,000 employees across its not-for-profit network of hospitals, physician organizations and other health care services.
Sutter Health has a consistent record of significant pension plan contributions to ensure that the Sutter Health Retirement Plan, with assets now exceeding $591 million, remains fully funded. In plan year 2003, the not-for-profit invested $147 million in the fund, and in 2002 invested $102 million. Sutter Health's fund is among the only 37 percent of U.S. employee pension funds that are fully funded, as compared to 84 percent in 1998, according to the human resource and employee benefits consulting firm Watson Wyatt Worldwide.
"The under-funding of pensions is one of the biggest problems facing American business today," said Sutter Health Senior Vice President and Chief Financial Officer Robert Reed. "Plan funding is an important gauge of an organization's commitment to its workforce. We've made it a top priority to take care of employees around our network and to be the employer of choice for all health care workers in Northern California," he added.
According to Reed, the Sutter Health Retirement Plan investment strategy is conservative and diversified with the goal of creating consistent, long-term income and maximum returns for employees. For the year ending Sept. 30, 2004, Sutter Health's pension fund had a return rate of 13.9 percent, placing it in the top 22 percentile of similar corporate pension plan performance.
"Fully funding our employee pension plan represents one of our single largest investments, but it reflects the importance we place on respecting employees and on preserving their financial health – now and in the future," said President and CEO Van R. Johnson.
According to the Pension Benefit Guarantee Corporation, companies with under-funded pension plans represent a total pension shortfall of $278.6 billion throughout the United States. Surveys by pension consulting firms also show that as many as 30 percent of client companies are freezing their pension plans, further eroding the pension promises made to millions of American workers and retirees.
*Pension Benefit Guaranty Corporation's (PBGC) Executive Director Bradley D. Belt's remarks given at the 6th Annual Conference of the Retirement Research Consortium on Aug. 13, 2004.