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This website is intended to offer information for Erlanger employees only.
Replies will only be provided to inquiries from employees of Erlanger.
What retirement benefits may employees receive after these changes?
What is the current financial condition of the Pension Fund?
What did the Board vote to do?
When do the changes in the Pension Fund become effective?
Does this change in the Pension Fund have an impact on all current employees?
How long will lump sum payouts be temporarily suspended for participants?
Do these changes to the Pension Fund have an impact on current retirees?
What led to the Board’s decision to address the underfunding of the Pension Fund now?
What did the analysis reveal about the current condition of the Pension Fund?
The option in the Pension Fund to take lump sum payments is based on assumptions set out in the Plan that cannot be changed. In other words, the Pension Fund establishes the interest rate and mortality tables used to calculate the optional lump sum payment amounts. The market based interest rate using the 15 year treasury used to calculate optional lump sums has been declining, along with other interest rates, for years and currently the interest rate used to calculate optional lump sums (15-year treasury note) is 1%. The very low interest rate coupled with low returns in the investment markets, have been major factors in the accelerated decline of the funding of the Pension Fund.
If something was not done immediately, the Pension Fund would not be able to provide all of the participants the pension benefits that the Pension Plan intends they receive.
The analysis also found that the projected earnings from the investments could not restore the Pension Fund to a healthy and financially sustainable condition. The Pension Fund also cannot expect to invest its way out of this current situation due to the realities of the investment markets.
The Board has voted to increase contributions above the Actuarially Determined Contribution amounts for FY 2020 by $2.1 million and the budgeted contributions for FY 2021 will be higher than FY 2020 contributions by $1,675.000. Without these most recent changes voted on by the Board, the optional lump sum payments and monthly benefit payments are projected under actuarial models to exceed these higher contributions by $8.7 million during FY 2021.
Were these decisions by the Board related to the financial condition of Erlanger?
Are these decisions by the Board due to the impact of the COVID-19 pandemic?
Did recent reports of interest in buying Erlanger prompt these changes?
Who was involved in the review and analysis process that resulted in these findings?
- Actuarial computations and analysis (Prudential Financial)
- Legal review (Baker Donelson)
- Investment history and analysis (Gerber Taylor)
- Guidance and counsel (Erlanger Human Resources)
- Oversight and recommendations (Board members with an understanding of the issues)