Sutter Health Reports Fully Funded Pension Plan
Not-for-profit health network bucks alarming national trend and pumps $249 million into employee pension fund
SACRAMENTO, Calif., June 23, 2004 —Sutter Health, a family of not-for-profit hospitals and physician organizations in Northern California, today reported that it has fully funded its employee pension fund by investing more than a quarter billion dollars into the Sutter Health Retirement Plan during 2002 and 2003. Sutter Health, whose fund supports 34,000 employees across its health care network, is uniquely meeting its obligations at a time when the Pension Benefit Guaranty Corporation (PBGC) reports an alarming national trend of troubled pension funds.
Last week, the PBGC reported that companies with under-funded pension plans represent a total pension shortfall of $278.6 billion throughout the United States. This staggering shortfall includes more than 1,050 individual funds that cover millions of American workers and retirees. In addition, Standard & Poor's recently projected a $259 billion gap in available pension funds from top U.S. corporations (largest 500 companies) if they were called upon to make good on their pension promises.
"Pension plan funding is an important gauge of an organization's commitment to its workforce," said Sutter Health President and CEO Van R. Johnson. "Attracting and retaining the very best employees is one our top goals at Sutter Health. Fully funding our employee pension plan is a sizable investment for us, but it reflects the importance we place on respecting our employees and on preserving their financial health – now and in the future," said Johnson.
In plan year 2003, Sutter Health invested $147 million into its employee pension fund and, in 2002, the organization invested $102 million. More than 2,800 retirees currently receive benefits.
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 leading human resource and employee benefits consulting firm Watson Wyatt Worldwide. And "the under-funding of pension funds at hospitals and health care systems is drawing scrutiny, and fixing the problem is proving expensive," according to a recent article in the San Francisco Business Times.
"The under-funding of pensions is one of the biggest problems facing American business today," said Sutter Health Chief Financial Officer Robert Reed. "Pension funding is a real cost of doing business and should be made a priority for all companies, especially those who provide such critical health care services," he added.