As the daughter of parents raised during the Depression, Kimberly Pattee was taught early to save for retirement.
“My dad always made sure that we understood finances,” Pattee, now 64, said. “With my very first paycheck, as a teenager, my dad made me start putting money into a tax-sheltered annuity.”
So when the longtime Mercy Iowa City nurse manager and administrator retired from the community hospital in 2022 after 33 years, she left with more than just that annuity she started young. She also had a 401(k) retirement plan and the pension the hospital promised her.
In fact, that pension was part of the reason Pattee left when she did — still shy of her 65th birthday but concerned about her hospital’s financial health.
“I was worried at that time — if I don't get my pension out now, I'm never going to get it,” said Pattee, of Coralville, noting that Mercy management around 2017 stopped producing budget reports and providing financial transparency. “I'm looking at how the building is going downhill. And not just the building, they quit doing grounds keeping.”
Since leaving her job, Pattee has been receiving pension checks. But Mercy Iowa City’s decision last week to file for Chapter 11 bankruptcy protection and initiate a $20 million sale of its assets to the University of Iowa has left her — and many other current and former Mercy employees like her — wondering whether and for how long that will continue.
“Nowhere in all of the press releases and stuff is Mercy talking about those of us who gave blood, sweat and tears for 30, 40 years there,” she said. “There are a significant number who retired from dietary and housekeeping that that is their primary retirement.
“I know of nurses who are still working, who are planning to retire in a month or two — are they even going to be able to get their retirement?” Pattee said. “Some of them have worked at Mercy their whole career — and have nothing besides that and Social Security. What is going to happen to those people?”
No one can say for sure. Or, rather, no one will.
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In addition to its main hospital, Mercy Iowa City owns or operates 18 primary and specialty clinics and employs a workforce of 1,122 employees and more than 90 physicians — making it the fifth largest employer in Iowa City.
In response to The Gazette’s question about whether all Mercy employees with pension plans still will get paid, a spokeswoman on behalf of the hospital said, “There are no changes to current pension payments at this time.”
“The disposition of the pension and how the funds will be distributed could be affected by the Chapter 11 proceedings,” Mercy officials said. “We do not know whether anything may change, and we do not know the time frame.”
She noted pension plan assets can be used only “for the benefit of pension participants and beneficiaries.” In other words, “Creditors do not have access to them.”
But Mercy’s pension plan is not fully funded. The hospital’s chief restructuring officer, Mark E. Toney, reported in a court declaration last week that as of June 30, it had about $118 million in pension assets — falling about $23 million shy of its $141 million pension obligations.
That is an improvement from two years ago, when Mercy in May 2021 reported its pension assets were about $79 million shy of obligations — making the pension plan about 40-percent unfunded, according to confidential documents obtained by The Gazette.
Mercy’s pension plan — established in 1968 — was frozen after Dec. 31, 2016, saving it from any new benefit accruals after that point. At the end of its 2020 budget year, according to an independent audit, Mercy’s pension obligation was $194.7 million and its assets sat at $113.2 million — put it $81.5 million shy and at 42-percent unfunded.
After filing for bankruptcy last Monday, Mercy asked a judge to let the hospital continue paying workers and honoring certain benefits — including the hospital’s retirement and pension plans.
“The pension plan is a vital entitlement and key retention tool to help retain (Mercy’s) workforce,” according to the hospital’s court petition. “Further, beneficiaries of the pension plan rely on those benefits as their primary or only form of retirement savings. Failure to continue administering the pension obligations to current retirees would indicate to current employees that their promised benefits were no longer guaranteed, which would likewise be severely harmful to morale.”
Chief Judge Thad J. Collins subsequently issued an order — on a temporary basis — allowing Mercy to keep paying employee wages, benefits and retirement obligations. And, during the first hearing on the bankruptcy filings, Collins asked Mercy attorneys whether they anticipate any issues involving labor unions or pension plans.
“Am I going to have a courtroom full of employees … or pensioners that are saying, ‘Wait a minute, that money was set aside for us’?” Collins said.
“There is a pension plan,” one Mercy attorney, Felicia Perlman, told the judge. “And there's been significant amount of communication with employees, and there will be a town hall (Wednesday) to keep them up to date on everything and be transparent on the process.”
www.thegazette.com
“My dad always made sure that we understood finances,” Pattee, now 64, said. “With my very first paycheck, as a teenager, my dad made me start putting money into a tax-sheltered annuity.”
So when the longtime Mercy Iowa City nurse manager and administrator retired from the community hospital in 2022 after 33 years, she left with more than just that annuity she started young. She also had a 401(k) retirement plan and the pension the hospital promised her.
In fact, that pension was part of the reason Pattee left when she did — still shy of her 65th birthday but concerned about her hospital’s financial health.
“I was worried at that time — if I don't get my pension out now, I'm never going to get it,” said Pattee, of Coralville, noting that Mercy management around 2017 stopped producing budget reports and providing financial transparency. “I'm looking at how the building is going downhill. And not just the building, they quit doing grounds keeping.”
Since leaving her job, Pattee has been receiving pension checks. But Mercy Iowa City’s decision last week to file for Chapter 11 bankruptcy protection and initiate a $20 million sale of its assets to the University of Iowa has left her — and many other current and former Mercy employees like her — wondering whether and for how long that will continue.
“Nowhere in all of the press releases and stuff is Mercy talking about those of us who gave blood, sweat and tears for 30, 40 years there,” she said. “There are a significant number who retired from dietary and housekeeping that that is their primary retirement.
“I know of nurses who are still working, who are planning to retire in a month or two — are they even going to be able to get their retirement?” Pattee said. “Some of them have worked at Mercy their whole career — and have nothing besides that and Social Security. What is going to happen to those people?”
No one can say for sure. Or, rather, no one will.
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In addition to its main hospital, Mercy Iowa City owns or operates 18 primary and specialty clinics and employs a workforce of 1,122 employees and more than 90 physicians — making it the fifth largest employer in Iowa City.
In response to The Gazette’s question about whether all Mercy employees with pension plans still will get paid, a spokeswoman on behalf of the hospital said, “There are no changes to current pension payments at this time.”
“The disposition of the pension and how the funds will be distributed could be affected by the Chapter 11 proceedings,” Mercy officials said. “We do not know whether anything may change, and we do not know the time frame.”
She noted pension plan assets can be used only “for the benefit of pension participants and beneficiaries.” In other words, “Creditors do not have access to them.”
Pension obligations
But Mercy’s pension plan is not fully funded. The hospital’s chief restructuring officer, Mark E. Toney, reported in a court declaration last week that as of June 30, it had about $118 million in pension assets — falling about $23 million shy of its $141 million pension obligations.
That is an improvement from two years ago, when Mercy in May 2021 reported its pension assets were about $79 million shy of obligations — making the pension plan about 40-percent unfunded, according to confidential documents obtained by The Gazette.
Mercy’s pension plan — established in 1968 — was frozen after Dec. 31, 2016, saving it from any new benefit accruals after that point. At the end of its 2020 budget year, according to an independent audit, Mercy’s pension obligation was $194.7 million and its assets sat at $113.2 million — put it $81.5 million shy and at 42-percent unfunded.
After filing for bankruptcy last Monday, Mercy asked a judge to let the hospital continue paying workers and honoring certain benefits — including the hospital’s retirement and pension plans.
“The pension plan is a vital entitlement and key retention tool to help retain (Mercy’s) workforce,” according to the hospital’s court petition. “Further, beneficiaries of the pension plan rely on those benefits as their primary or only form of retirement savings. Failure to continue administering the pension obligations to current retirees would indicate to current employees that their promised benefits were no longer guaranteed, which would likewise be severely harmful to morale.”
Chief Judge Thad J. Collins subsequently issued an order — on a temporary basis — allowing Mercy to keep paying employee wages, benefits and retirement obligations. And, during the first hearing on the bankruptcy filings, Collins asked Mercy attorneys whether they anticipate any issues involving labor unions or pension plans.
“Am I going to have a courtroom full of employees … or pensioners that are saying, ‘Wait a minute, that money was set aside for us’?” Collins said.
“There is a pension plan,” one Mercy attorney, Felicia Perlman, told the judge. “And there's been significant amount of communication with employees, and there will be a town hall (Wednesday) to keep them up to date on everything and be transparent on the process.”
Mercy Iowa City employees raise questions about pension
Since leaving her job, Pattee has been receiving pension checks. But Mercy Iowa City’s decision last week to file for Chapter 11 bankruptcy and initiate a $20 million sale of its assets to the University of Iowa has her — and many other current and former Mercy employees like her — wondering...
www.thegazette.com
