PROVIDENCE, R.I. (WPRI) — A federal insurance program has agreed to cover all benefits for members of the orphaned St. Joseph's Health Services pension plan, signaling an end to a dispute that's kept thousands of Rhode Islanders in a state of limbo for the past decade. Attorney Stephen Del Sesto, a court-ordered receiver in the matter, announced this week the federal Pension Benefit Guaranty Corp. has agreed to cover the promised benefits for the plan's nearly 2,700 active and pending members. When accounting for the plan members' beneficiaries, the decision could affect the financial wellbeing of between 8,000 and 10,000 people, according to recent estimates. Del Sesto told Target 12 this is the first time in history the PBGC has covered a church plan. "This is a monumental win for the pension-holders," he said. The PBGC, which covers retirement benefits for about 31 million Americans, is financed by insurance premiums, investment income and assets recovered from failed pension plans. It will take over the plan's current $45 million in assets as part of the agreement. "These people rely on this money to live on a day-to-day basis and the thought that it was going to go away was an immense pressure on them," Del Sesto said. Marilyn Horan, who was born at St. Joseph's Hospital and worked there for 40 years before retiring, said she was thrilled when she learned about the decision. "It's wonderful," said Horan, who now lives in Wakefield. "What a Christmas gift." The pension plan, which has nearly $230 million in liabilities and is underfunded by $88 million, has been a point of contention for the past decade, pitting retirees against hospital owners, charitable organizations and the Roman Catholic Diocese of Providence. The plan became insolvent in 2014 after the diocese stopped paying into it, having sold the hospital and its liabilities to CharterCare, which was owned by Prospect Medical Holdings. In 2017, the plan entered into receivership, a state-level version of bankruptcy, and R.I. Superior Court Judge Brian Stern named Del Sesto as its receiver. Prospect at the time proposed cutting benefits 40%, which raised the ire of pensioners, who had paid into the program throughout their careers. Horan said she remembers the day. "It was devastating," she said. Max Wistow, the prominent Providence attorney, was hired as special counsel, and the two lawyers received court approval to investigate what happened and pursue litigation. Wistow ultimately sued 14 different organizations to try and recoup funds and help keep the plan afloat as it continued to pay out 100% of benefits to its current 1,600 retirees. In all, the legal team recouped $50 million in settlements, including from the the diocese, which last year agreed to pay $2.5 million. "This is a 100% win for the pensioners," Wistow said Tuesday. "It really is a gratifying result because these are really people who deserve this." Meanwhile, five years ago Del Sesto started using the plan's dwindling assets to begin paying annual premiums into the PBGC, asking the federal program to step in and cover the members' benefits. While most non-government pension plans must pay premiums into the PGBC, which was created under the 1974 Employee Retirement Income Security Act, the diocese chose not to because the church is exempt from the statute as a religious organization. Del Sesto estimates the plan paid $10.5 million into the program since 2019, which he said was ultimately the right decision because the PBGC has now agreed to take over the benefits, offering a lifetime guarantee to the pensioners and their beneficiaries. During the course of the receivership, which Del Sesto said he expects will now end in June, the plan saw its assets decline from $87 million in 2017 to about $45 million this year. During that time, the plan paid out about $85.5 million to retirees, he said. "It was like sitting on a stove wondering if we'd get it month to month," Horan said. "I'm very happy." Eli Sherman ([email protected]) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook. Kate Wilkinson ([email protected]) is a Target 12 investigative reporter for 12 News. Connect with her on Twitter and Facebook. Close Thanks for signing up! Watch for us in your inbox. Subscribe Now Daily Roundup SIGN UP NOW