Northern Light Health is ending pension benefits for roughly 6,000 employees.
The change from pensions to a 403(b) retirement plan was announced to staff Thursday and takes effect July 1, 2025. Employees at Eastern Maine Medical Center, Acadia Hospital, Northern Light’s home offices and some off-site locations are affected by the change.
Eliminating pensions will save the health system money in the long run, said Paul Bolin, chief people and administrative officer for Northern Light Health. The change comes as the largest health care system north of Portland has weathered credit rating downgrades this year and faces a $100 million deficit.
Employees who are 55 or older and have worked at Northern Light for five years or more are eligible to keep their pension, Bolin said. There isn’t enough time before their expected retirement to see the benefits of a 403(b).
A pension plan is typically funded by an employer and guarantees payments for life at a set amount after retirement. In a 403(b), an employee can choose to make contributions and an employer can offer a match percentage.
Employees early in their career can see the highest returns with this new plan, while people further in their career will see similar benefits to a pension, Bolin said.
“We’ve really taken a thoughtful approach, trying to find a win-win for the staff [and Northern Light] and this is it,” Bolin said.
Northern Light is increasing its employer match to 403(b) accounts, with employees who have worked there for fewer than five years receiving a 50 percent match up to 6 percent. Employees with five years or more at Northern Light will receive a 75 percent match up to 8 percent.
Administrative costs for pensions are high, with Northern Light paying about $6 million a year to the Pension Benefit Guaranty Corporation, Bolin said. That money doesn’t benefit employees or the hospital system, instead it’s essentially insurance, he said.
