...Measured Approach to Pension Management: Fitch Ratings believes most not-for-profit healthcare providers have taken a prudent approach in managing deferred compensation liabilities following several years of pension funding volatility affecting cash flows, expenses, and net assets. In an effort to moderate balance sheet risk related to actuarial assumptions and investment performance, many providers have chosen to amend existing defined benefit (DB) plans. Major Amendments Made: The most common changes made to DB plans have been closing, freezing, or terminating those plans and moving to a defined contribution (DC) model. Additionally, a few providers have taken advantage of the low interest rate environment to issue taxable debt and use the proceeds to augment invested assets which improves funded status. This report provides a description of most commonly utilized strategies as well as the financial implications of the various approaches. Positive Implications: The DB plan amendments...
