A news report in the (Orangeburg) Times and Democrat said that Regional Medical Center will also continue its 403(b) plan and introduce an employer-based defined contribution plan based on years of service. The freeze is to be effective January 1.
Officials said the pension plan is being restructured because, otherwise, the hospital would have seen the annual cost increase from about $2.8 million to $7.8 million beginning October 1.
A switch in the hospital’s investment portfolio cut its return from about 8% to about 5.5%, according to the news report. A portion of the hospital’s pension fund was previously invested in stocks and hedge funds, drawing criticism from some Orangeburg County Council members and hospital trustees, who said the investments were not allowed by state law.
As part of the new, employer-funded DC plan, the hospital will contribute about 1% of an employee’s salary for the first four years of service and 5% of the salary for 20-plus years of service. The percentage will increase for every four years of an employee’s service. The company’s 403(b) plan remains unchanged.