Lockport Union-Sun & Journal — A lien has been filed against Eastern Niagara Hospital’s Lockport and Newfane sites by the Pension Benefit Guaranty Corp., a federal agency that monitors employer contributions to retirement accounts.
The PBGC filed a federal tax lien with the Niagara County Clerk’s Office in November because Eastern Niagara failed to make payments on employee pensions. However, there has been no reduction to the pension of any individual as a result of the missed payments, hospital officials said.
According to the filing, Eastern Niagara missed payments totaled $889,608. But that amount balloons to $2,258,670 with interest.
Under the U.S. Internal Revenue Code, the filing of a federal tax lien is required for pension plans with missed payments. In a statement released by Carolyn A. Moore, Eastern Niagara’s director of community relations, the missed payments were in part, a result of historically low interest rates.
“Interest rates dropped due which resulted from the 2008 recession and subsequent federal fiscal policies, ENH’s recent required pension contributions were calculated in an amount dramatically higher than in previous years,” the statement said. “Interest rates are a key component in the formula used to determine pension contributions and this issue is not unique to ENH. It has impacted a number of institutions (including many hospitals) during the past several years.”
Typically, as interest rates drop, an employer’s contribution to a pension system will increase. Hospital officials said as Eastern Niagara looked at the contribution requirements, it became clear the hospital would not be able to afford the payments.
One of the difficulties Eastern Niagara faced, hospital officials said, was “at the same time making needed capital investments in its business operations and new initiatives required to ensure its long term viability.”
Eastern Niagara Hospital has started a process of developing a plan in conjunction with the PBGC that will result in the full funding of pension contributions. It will also allow the hospital to continue “with initiatives designed to strengthen its long term viability.”
The lien includes both the Newfane hospital site on Transit Road and the Lockport hospital on East Avenue.
The PBGC filed a lien against Niagara Falls Memorial Medical Center in 2008. The lien was released in 2011.Contact reporter Joe Olenick at 439-9222, ext. 6241 or follow him on Twitter @joeolenick.