LEWISTON — A day after it unveiled Phase I of a $45 million building project, Central Maine Healthcare told workers it will drop its pension program and institute a 401(k) program because hospital group cannot afford the wild swings associated with funding a pension. 

Central Maine Healthcare officials said the timing was coincidental and that Central Maine Medical Center’s new Emergency Department had nothing to do with dropping the pension program.

“This has been a long-term decision in the making,” said Matthew Cox , chief financial officer for Central Maine Healthcare.

The corporation is the nonprofit parent organization of CMMC in Lewiston, Rumford Hospital and Bridgton Hospital. Bridgton already has a 401(k)-type plan in place. The change will affect nearly 3,000 other administration, management and hourly employees, 1,575 of whom currently participate in the pension plan. Workers were told about the change Thursday.

Cox said the announcement came this week because the hospital group had to give employees a 45-day notice of the change.

Officials said board members had been studying the pension plan for the past four years and decided to freeze it a year ago, allowing current employees to keep participating but preventing new hires from joining. Starting March 31, the hospital group will drop the pension plan for all employees, new and old. This change will not affect retirees who are already collecting pensions.

Employees will not lose any vested benefits earned under the pension plan, officials said. Workers who aren’t yet fully vested can continue earning pension-plan credit after March 31 so they can meet the five-year vesting requirement.

Under the pension plan, workers contributed 1.7 percent of their income to retirement. Depending on market conditions and interest rates, that employee contribution was sometimes enough to fully fund the program. Other times, the hospital group had to contribute. Officials said $5.5 million has been pumped into the pension plan every year for the past six years, but it needs more. By April 1, they estimate Central Maine Healthcare will have to contribute another $11 million to $15 million for the year. 

“As we look to the future, these unpredictable funding requirements are not sustainable or affordable,” officials said in a statement released Friday.

Instead, the hospital group will institute 401(k) plans and 403(b) plans, which are similar to 401(k) plans but offered by nonprofits. Central Maine Healthcare will put in a dollar for every dollar contributed by an employee, up to a cap.

Officials said employees have often asked the hospital group to create a 401(k) program because, unlike a pension plan, workers can leave leftover money to their beneficiaries, can borrow from it before retirement and can take the money with them when they leave their jobs.

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