retirement program changes at the christ hospital … · 3 discussion purpose discuss the new,...
TRANSCRIPT
RETIREMENT PROGRAM CHANGES AT
THE CHRIST HOSPITAL HEALTH NETWORK (TCHHN)
Employee Education Sessions
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Discussion Roadmap
Background Information National Trends What’s Changing How Your 403(b) Retirement Savings Plan Will Be Enhanced How Your Pension Plan Benefit Will Be Preserved Resources and Action Steps to Help You Prepare Questions
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Discussion Purpose
Discuss the new, enhanced 403(b) Retirement Savings Plan effective 1-1-2014
• Discuss how the current TCHHN Pension Plan will be protected and preserved effective 12-31-2013.
• Discuss your role in the transition to the 403(b) Retirement Savings Plan.
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Background Information and National Trends
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Background Information
Implementation of the Affordable Care Act is transforming how we deliver care and receive payment as an organization, creating significant cost and administrative burdens for the network and consumers − These increased costs will fall on our patients unless we take steps
to keep healthcare affordable − Moving forward, patients will demand better value and better
outcomes at lower costs Our current Pension Plan has a $65,000,000 funding liability (this is the
cost to TCHHN) − The funding liability is based on the market, so it can go up or down
outside of our control − Last year’s liability was $113,000,000
TCH pays $260,000 annually to the government for pension insurance
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Background Information
To meet this unsustainable, unpredictable situation and continue to provide a market-competitive retirement program, TCHHN will protect and preserve the current Pension Plan on 12/31/2013 and replace it with an enhanced 403(b) Retirement Savings Plan on 1/1/2014 − Enhanced plan developed in consultation with national and local
experts, including Mercer, Principal, Frost Brown Todd, Horan, as well as TCHHN benefits task group
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National Trends
Nationally – 70% of healthcare organizations provide defined contribution plans (like our
403(b) Retirement Savings Plan), while 70% do NOT offer defined benefit plans (like our Pension Plan)*
Nationally – 50% of all employees are in a defined contribution plan and 22% are in a defined benefit plan (the balance do not have a retirement plan)**
Locally
4 out of 7 health systems currently offer plans other than a defined benefit plan
7/1/2014 - UC Health will move to a defined contribution plan very
similar in design to the TCHHN 403(b) Retirement Savings Plan *Mercer Human Capital, 2011 Survey
**US Bureau of Labor Statistics, 2011
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What’s Changing
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Overview of 403b Retirement Plan Changes
On January 1, 2014, all employees* participating (and those that begin to participate) in the 403(b) Retirement Savings Plan, will include the following:
– New TCHHN matching contribution:
• 50% match on first 6% of employee contribution (total of 3% match)
• Matching contributions vest after three years of service
– New transition credits over five years to support current Pension Plan participants who meet certain age and service requirements
– CareShare contribution based on network performance
*excluding employed physicians
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Overview of Pension Benefit Changes
At the same time, we will preserve and protect the current Pension Plan effective December 31, 2013. This means:
Your earned benefit will be preserved and paid out to you or your beneficiary when you retire
– You stop earning a benefit under the plan on this date – You will not earn any future benefit under the Pension Plan
after this date
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How Your 403(b) Retirement Savings Plan Will Be Enhanced
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How the 403b Retirement Savings Plan Works
The 403(b) Retirement Savings Plan is a defined contribution plan that grows with: your personal contributions, TCHHN contributions, and investment returns (if any)
New employees are automatically enrolled in the plan at a 2%
contribution level Contribution levels are automatically increased 2% each year until the total employee
contribution rate reaches 6% Employees may opt out of automatic enrollment at any time
All employees may change their contribution level at any time
Advantages to Participating in the 403b Savings Plan
Matching Contributions from TCHHN Saving for retirement is a partnership When you save through the plan, you’ll receive significant matching
contributions from TCHHN Faster Vesting You are immediately vested in your contributions and CareShare
contributions; all other contributions from TCHHN vest after three years You receive the vested portion of your account if you leave TCHHN for any
reason More Control You decide how much to set aside for retirement How that money grows is based on your investment strategy Portability Your vested benefit follows you if you change jobs You can transfer funds to an IRA or another qualified plan, receive it in
payments, or keep it invested in the plan until it is paid out
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How Your 403b Retirement Savings Account Grows
Your 403(b) Retirement Savings Plan account grows based on the following:
Your contributions
+ TCHHN matching
contributions +
CareShare contributions (if awarded)
+ Investment
return or losses
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Personal Contributions to your 403b Retirement Savings
IRS 2013 & 2014 Annual Maximum = $17,500 You may contribute up to this maximum annually If you are at least age 50 any time during the year, you can make an additional
$5,500 in pre-tax contributions to your account The annual maximum, just applies to your personal contributions. Includes both Pre-Tax & Roth personal contributions What TCHHN contributes on your behalf, is not subject to this maximum
Eligible rollovers from another qualified plan are also permitted You are:
– Able to change or stop contributions at any time – Immediately 100% vested in your personal contributions
New Employee Reminder: your contributions will automatically escalate by 2% each year, up to 6%, unless you opt out
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TCHHN Matching Contributions to your 403b Retirement
TCHHN matches your contributions to the plan: – 50% match on first 6% of savings (total of 3% match) – Match made on a payroll by payroll basis
You are 100% vested in matching contributions after 3 years of service, including prior service you have already earned from TCHHN
When you contribute: TCHHN will match with: 1% of pay 0.5% of pay 2% of pay 1.0% of pay 3% of pay 1.5% of pay 4% of pay 2.0% of pay 5% of pay 2.5% of pay
6% of pay (or higher) 3.0% of pay
CareShare Contributions to your 403b Retirement
An annual discretionary contribution based on network performance may be contributed each year based on CareShare performance
You are eligible to receive CareShare discretionary contributions if you:
– Are employed on last day of fiscal year (June 30) – worked 625+ hours during the fiscal year. – Received a performance appraisal for the fiscal year that is at least
“meets expectations” – Were not subject to a written corrective action during the fiscal year – Are not a vice president, director, manager or physician
You immediately vest in CareShare contributions
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Transition Credits to 403(b) Retirement Savings Plan
• To transition to the new program, some Pension Plan participants will receive transition credits to their 403(b) Retirement Savings Plan account for a period of 5 years: – You are eligible for the transition credit if your age plus years of
service as of December 31, 2013 equal at least 55 – The amount of the transition credit is based on your age plus years
of service as of December 31 of each subsequent year
Age + Years of Service equals: 55-64 65-74 75+
Percentage of pay contributed by TCHHN: 1.5% 2.0% 2.5%
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Transition Credits to 403(b) Retirement Savings Plan
For Example: If you are 48 with 12 years of service on December 31, 2014
Age plus service: Transition credit:
60 in year 1 (2014) 1.5% of pay
62 in year 2 (2015) 1.5% of pay
64 in year 3 (2016) 1.5% of pay
66 in year 4 (2017) 2.0% of pay
68 in year 5 (2018) 2.0% of pay
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Age + Years of Service equals: 55-64 65-74 75+
Percentage of pay contributed by TCHHN: 1.5% 2.0% 2.5%
Transition Credits to 403(b) Retirement Savings Plan
You become 100% vested in the Transition Credit contributions after three years of service
In addition to the age plus years of service requirement, you are eligible to receive transition credits if you:
– Are either an active Pension Plan participant or eligible for the Pension Plan as of January 1, 2014
– Are employed on last day of the plan year (December 31) – Have completed at least 1,000 paid hours of service during the plan
year
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How to access your 403(b) Retirement Savings Plan Account You can receive your 403b vested account balance:
– Upon retirement, or – At age 59½
Benefits can be distributed in one of three methods: – Lump sum – Fixed period installments – Fixed payment installments
Hardship withdrawals are available on your contributions only Loans are available on all accounts (one outstanding at a time), but
may incur tax penalties
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How Your Pension Plan Benefit Will Be Preserved
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The Pension Plan is a defined benefit plan that: – Provides you with a monthly benefit at retirement – Is guaranteed – Is funded entirely by TCHHN
Your benefit is determined based on age, pay, and service with TCHHN at retirement
Your benefit as of December 31, 2013, will be calculated and preserved using a formula based on:
How the Pension Plan Works
Final Average Earnings
Years of Credited Service
Social Security Covered
Compensation
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Calculating the Earned Pension Plan Benefit
1% of Final Average Earnings
(FAE)
+
0.35% of Final Average
Earnings in Excess of Covered
Compensation
X
Years of Credited Service
(up to 30)
÷ 12 =
Earned Preserved
Benefit as of December 31, 2013
For Employees of Fort Hamilton-Hughes, Jewish Hospital of Cincinnati, and St. Luke Hospital: The formula used to calculate their earned Pension Plan benefit, as well as how some of these terms are defined, will vary
This benefit is in addition to any previously accrued Pension Plan benefit under a prior plan
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Important Reminders
Any benefit earned from the Pension Plan as of December 31, 2013, will be preserved and protected
– You will NOT lose any benefit earned as of
December 31, 2013 – No future benefit will accrue after this date
You will receive a guaranteed monthly benefit when you retire You will continue to earn years of service for vesting purposes and
determining eligibility for early retirement after December 31, 2013
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You become vested in your Pension Plan benefit after five years of service, including any years of vesting service already earned – A year of vesting service is earned for each calendar year in which
you complete 1,000 paid hours of service – You will continue to earn vesting service in future years
You can retire at normal retirement age (age 65) and receive the full Pension Plan benefit – You can also retire as early as age 55 with five years of credited
service, but benefit will be reduced – You will continue to earn years of service for determining eligibility
for early retirement There are various forms of monthly benefit payment options available
upon retirement
Vesting and Receiving Your Pension Plan Benefit
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Resources and Action Steps to Help You Prepare
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What You Need to Do
Review communication materials you receive from TCHHN, including personalized Pension Plan statement
Share information with your personal financial advisor. One-on-one investment education meeting will be available beginning
in January 2014. Please stay tuned to future communications, to sign up for your individual appointment.
Review current 403(b) elections to determine if you can save more through the plan − Need to save up to 6% of pay to receive the full matching contribution
Make sure beneficiary designation is up to date on www.Principal.com
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Questions?