Questions and Answers for Participants in the Verity Health System Pension Plans

PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to protect pension benefits in private sector defined benefit plans - the kind that typically pay a set monthly amount at retirement. If your pension plan is insured by PBGC and it ends without sufficient money to pay all benefits, PBGC's insurance program will pay you the benefit provided by your pension plan up to the limits set by law.

PBGC operations are financed by insurance premiums, investment income, and assets and recoveries from failed single-employer plans.

Yes. Both Verity Health System pension plans are covered under Title IV of ERISA. However, because neither pension plan has been covered by PBGC’s insurance program for five years, pension payments will be affected by the legally-required five-year phase-in limit on PBGC’s benefit guarantee for new and newly covered plans that begins with the date of coverage.

Verity Health System was a California nonprofit public benefit corporation that operated six separate hospitals – O'Connor Hospital, Saint Louise Regional Hospital, St. Francis Medical Center, St. Vincent Medical Center, Seton Medical Center, and Seton Medical Center-Coastside – and other facilities in the state of California.

Verity Health System was originally owned and operated by the Daughters of Charity of St. Vincent de Paul, Province of the West, which became the Daughters of Charity Health System. Church sponsored pension plans are generally not covered by PBGC insurance, but in 2015, the hospitals were converted from religious corporations to public benefit corporations. Effective December 14, 2015, Verity made changes to the Verity Health System Retirement Plan A so that ERISA would apply to it and the pensions would become covered by PBGC, subject to guarantee limitations in the law. Plan B was spun off from Plan A and its pensions also became covered by PBGC.

No. The Verity Health System Supplemental Retirement Plan is an individual account savings plan, specifically a 401(a) plan. It is not covered by PBGC’s insurance.

No. The Verity Health System pension plans remained ongoing and under the responsibility of Verity Health System until April 30, 2019, the date the pension plans were terminated. While underfunded pension plans often terminate during bankruptcy proceedings, a company’s bankruptcy filing by itself does not terminate a pension plan. However, the date of the bankruptcy filing does affect the amount PBGC guarantees. Please see below.

Workers, retirees and beneficiaries covered by the Verity Health System pension plans should direct all pension benefit communication to the Pension Benefit Guaranty Corporation Customer Contact Center.

Visit our Contact Us webpage for more information.

When an underfunded pension plan is terminated and transferred to PBGC, we notify plan participants and beneficiaries and provide information about their plan and about PBGC.

• If you are already receiving a pension from Verity Health System, your payments continue, without interruption, in the annuity form you chose at retirement.
   
• If you are not yet receiving a pension, we will pay you an estimated benefit when you become eligible and apply for pension benefits.
  
  Visit our Apply for Your Pension Benefits webpage to find instructions and important information about starting your pension benefit.
  
  If you are applying as a beneficiary of a deceased participant, please visit our Apply for Survivor Benefits webpage.

Yes. Almost all people covered under the Verity Health System pension plans will receive reduced benefits because the pension plans were insured by PBGC for less than three years when Verity Health System entered into bankruptcy, August 31, 2018. Federal law requires plans to be insured for at least five years to be eligible for the full PBGC guarantee.

Starting in July 2024, Verity participants will receive a benefit determination from PBGC that tells them the benefit amount that PBGC can pay them. Their benefit amount will no longer be an estimated amount. The benefit determination also will tell participants how they can appeal PBGC’s determination.

Verity Health System participants will receive the amount of their vested plan benefit that is guaranteed by PBGC under the law or the amount that can be provided from plan assets, whichever is greater.

Guaranteed Benefits. By law, PBGC does not guarantee benefits earned after the date Verity Health Systems filed for bankruptcy protection (August 31, 2018).  Vested benefits earned before that date are guaranteed subject to two limitations: 

Maximum Guarantee. PBGC’s maximum monthly guarantee is determined by the year of the bankruptcy filing (2018) and depends on your age when your PBGC payments start. Visit Maximum Monthly Guarantee Tables to learn more. 

Guarantee Phase-in Limitation. Pension benefits must be covered by PBGC for five full years for the guarantee to be fully phased-in. PBGC guarantees 20 percent of the benefit for each full year the benefit was insured before the plan sponsor files for bankruptcy. When Verity filed for bankruptcy protection on August 31, 2018, pension benefits had been covered by PBGC only for two full years. This means PBGC guarantees 40 percent of the Verity Health System pension benefits. 

Benefits Funded by Plan Assets. If plan assets provide more than the guaranteed amount, PBGC will pay the greater amount. The law allocates plan assets first to certain benefits of individuals who were receiving or were eligible to receive benefits at least three years before the date the plan sponsor filed for bankruptcy. Most individuals in Verity Health System Plan A who were receiving or were eligible to receive plan benefits before August 31, 2015, will receive up to 78 percent of their Plan A benefits from plan assets. Individuals in Verity Health System Plan B who were receiving or were eligible to receive benefits under the terms of the plan before August 31, 2015, will receive up to 100 percent of their Plan B benefits. Visit PC3 Benefits - Q&A to learn more about the effect of plan assets on the benefits that PBGC pays.

Yes. You have 45 days from the date of your benefit determination letter to file an appeal with the PBGC Appeals Board. You may also request an extension of time to file an appeal, as long as you do it within 45 days of the date of your benefit determination.

If you appeal, the PBGC Appeals Board will consider your case and either grant or deny your appeal.

For more information, see PBGC’s brochure, Your Right to Appeal.

Unfortunately, no. PBGC must pay benefits according to limits set by federal law. The PBGC Appeals Board does not have the authority to restore benefits that are over federal limits.

Verity Health System Plan A and Plan B are separate plans with different benefits and plan assets that were held in legally separate trusts. The same guarantee rules apply to both plans. Both plans were underfunded when the plans terminated, but they had enough assets to provide some individuals with larger payments than the PBGC-guaranteed amounts. However, Plan B was better funded than Plan A. Most individuals in Plan A who were receiving or were eligible to receive plan benefits before August 31, 2015, will receive up to 78 percent of their Plan A benefits. Individuals in Plan B who were receiving or were eligible to receive plan benefits before August 31, 2015, will receive up to 100 percent of their Plan B benefits. Visit PC3 Benefits - Q&A to learn more about the effect of plan assets on the benefits that PBGC pays.

When we have completed our review of your plan and issue a benefit determination letter to you:

• If you have received estimated benefit payments that are too high, we will adjust your future monthly payments to the correct amount, further reduced normally by no more than 10% until the overpayment has been repaid.
• PBGC does not charge interest on overpayments.
• If we have paid you an estimated benefit that is too low, we will make up the missed amounts in a single payment with interest.

No. You cannot earn additional pension benefits under your plan after the date the plan terminates.

Note: The Verity Health System froze benefit accruals for most participants in 2008 and 2011. By 2019, the only participants still earning additional benefits were certain members of the California Nurses Association. Active participants continued to earn service after the freeze date toward vesting, eligibility for early retirement, and certain forms of payment. However, on April 30, 2019 (Date of Plan Termination), all service accruals ceased. Please keep in mind, PBGC’s guarantees are based on service earned as of the date Verity Health System entered into bankruptcy, August 31, 2018.

Yes. In the past, PBGC did not pay pension benefits to workers who continued to work for the company that had sponsored the pension plan. PBGC rescinded its working retirement rule as of June 1, 2021. If you are entitled to a Verity pension benefit and start receiving payments on or after June 1, 2021, you may receive that benefit even if you are still working. You may work for any company, including those related to Verity.

The Verity Health System Retirement Plan A covered nearly 7,000 people and was 52% funded when it terminated. The plan was underfunded by $306 million. A separate plan, the Verity Health System Retirement Plan B, covered about 1,000 people and was 74% funded when it terminated. Plan B was underfunded by $2.8 million.

PBGC stepped in to become responsible as trustee because the company’s two pension plans would have been abandoned following the sale of Verity Health System’s assets.

Some pension plans offer their participants lump sum payments for the full value of their pensions, but PBGC generally does not. PBGC pays benefits in monthly payments for life. However, if the total value of your benefit payable by PBGC is $5,000 or less when the plan terminates and you have not started receiving monthly payments, you can receive a lump sum from PBGC.