Intermountain Health Freezes Pension Plan
Intermountain Health, a prominent healthcare provider based in Utah, announced a significant change last week: it will be freezing its long-standing pension program. This decision affects around one-third of the organization’s more than 68,000 employees, aligning Intermountain with a national trend among companies transitioning from traditional pensions to contribution-based retirement plans.
Reasons Behind the Decision
The management at Intermountain cited several factors influencing this decision, including ongoing financial pressures, diminished government reimbursements, inflation, and substantial market volatility. The Board of Trustees made this evaluation after careful consideration of the long-term impacts on both the organization and its employees.
“This decision aims to prioritize Intermountain’s financial stability while preserving retirement security for our current and former caregivers,” stated the announcement on its official website.
Pension History and Employee Impact
The pension plan, which dates back to the founding of Intermountain in 1975, has seen significant changes over the years. Although a 401(k) plan was introduced in the early 1990s, new employees have been ineligible for the pension since 2020. Currently, only a small fraction of employees can access these benefits, leaving many uncertain about their retirement planning.
Employee Concerns and Future Safeguards
A physician from Intermountain Health, who chose to remain anonymous, expressed concern that eligible employees, including various administrators, are frustrated but unsure about how to address the changes. Many workers may lose substantial future earnings, highlighting a disconnect between prior recruitment promises and new realities.
Despite these changes, Intermountain assures that all pension benefits earned up until the freeze date of December 31, 2026, will be safeguarded and will continue to accrue interest until distribution. This protection is reinforced by federal laws governing employee retirement plans.
Shifting Landscape of Retirement Plans
The transition away from pension plans reflects a broader trend across the U.S. business landscape. Companies over the past few decades have opted for defined contribution plans, like 401(k)s, as a means to reduce financial liabilities. In fact, about 97% of American healthcare organizations currently only offer 401(k) plans. This shift transfers the investment risk from the employer to the employee.
New Benefits and Support for Employees
While the exact financial savings from this pension freeze have not been disclosed, Intermountain has indicated that resources previously allocated to the pension plan will support new employee benefits, including a 2% automatic contribution to the 401(k) and a Retiree Medical Savings Account for those affected by the pension freeze.
Additionally, Intermountain is providing comprehensive support to employees transitioning away from the pension plan. This includes financial planning webinars, one-on-one retirement consultations, and accessible tools for calculating future benefits.
Conclusion
Intermountain Health operates an extensive network of 33 hospitals and over 400 clinics across six western states. As the healthcare industry continues to evolve, the decisions made by organizations like Intermountain will have lasting impacts on employees’ financial futures. Employees are encouraged to seek professional financial advice to navigate the changes effectively and secure their retirement goals.
