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

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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