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Another Pension Transition Hits Home

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A pension fund that went from a healthy fund ratio (assets/liabilities) to one where there is now $0.79 in assets for every $1 in liabilities. A contract negotiation involving a labor union that represents a third of the work force. A desire to move away from defined benefit pensions to a defined contribution system under a 403b.

While this sounds like a description of the pension situation that is faced by any number of municipal governments in southwestern Pennsylvania, it is the one that one of the region’s largest health care providers, Jefferson Regional Medical Center, grapples with rising costs and renegotiates labor contracts.

The head of the labor union said that the preference to move to a 403b was limited to professionals and that hourly workers would be less likely to invest in a defined contribution system. "That becomes a problem in negotiations" he said.

True, and the union is free to go on strike over the pension issue. But unlike their public sector counterparts in the schools or transit systems there is a chance that the employer can bring in replacement workers. And the union likely does not enjoy the same leverage with lawmakers to forestall pension changes as happened when Act 44 was being formulated. Will the medical center become part of the larger trend in the private sector where the defined benefit pension is becoming extinct?

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