Moody’s Predicts that Nonprofit Hospitals will Continue to Deal with Pension Liabilities

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Nonprofit hospitals will continue to seek ways to mitigate the growing burden of unfunded pension liabilities this year, according to a Moody’s Investors Service report.

“For many hospitals, material growth in unfunded pension liabilities has roots in low interest rates (which provided a low return on assets) and a change in mortality tables, increasing future pension obligations,” according to Moody’s. Hospitals have several options to address growing pension burdens, including closing a pension plan to new employees, annuitizing the plan or offering lump-sum payouts.

Moody’s stated that hospitals exploring ways to mitigate rising pension liabilities is a credit positive trend that it expects to continue in 2017.

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