PASCAGOULA — Singing River Health System is dropping a defined-benefit retirement plan for employees.
CEO Kevin Holland said the hospital can’t afford the $18 million to $20 million a year it takes to fund the current pension plan.
What will replace it hasn’t been determined.
Employees were notified Friday by email.
Singing River Health System owns hospitals in Pascagoula and Ocean Springs. The hospital system is county-owned. The taxpayers of Jackson County co-sign the hospital’s $97 million debt, but it is self-supporting and does not use tax dollars to operate. It has a $350 million operating budget and is facing cuts because of the shortfall discovered and announced at the first of the year.
It is the county’s second largest employer with 2,400 workers.
Holland said details are still being worked out but 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.”
There are 2,389 people in that plan now, Holland said, and 623 of those are retired and currently drawing money.
Newer employees were enrolled in a defined contribution plan, which is less costly and more predictable for Singing River. No major changes were announced for that plan.
Singing River left the state’s Public Employees Retirement System in 1983 to move toward the defined benefit pension plan.
It currently has more than $136 million in assets, but anticipated future need is at more than $285 million, given the current number of retirees and active employee participants, Holland said.
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