- Fred Meyer and QFC employees from four local unions have ratified an agreement with Kroger to transfer approximately $ 400 million of pension obligations from an underfunded plan to the UFCW Consolidated Pension Plan, the grocer Announced Friday.
- The agreement to transfer the funds from the Sound Retirement Trust to the UFCW plan covers benefits for more than 10,600 workers on the two Kroger banners and, according to Kroger, is intended to keep the grocer’s market risk to a minimum while reducing administrative costs.
- Kroger’s deal with the workgroups comes as the federal government takes steps to protect retirement pensions for workers hit by difficult retirement plans.
Kroger’s agreement with the working groups representing Fred Meyer and QFC workers reflects widespread financial problems with multi-employer pension plans that could cause them to fail for years to come.
More than one million US workers participate in more than 130 multi-employer pension plans at risk of breakup. according to the House Committee on Education and Labor. These type of plans, which benefit unionized workers in a variety of industries, cover approximately 10 million people. CNBC reported.
The latest round of federal pandemic aid includes measures to stabilize financially ailing pension plans and protect employee benefits. However, the Sound Retirement Trust is not entitled to any legal relief, Gary Millerchip, Kroger’s chief financial officer, said in a statement. Pension Benefit Guarantee Corp. (PBGC), the federal agency that acts as a setback for collapsing pension plans, is itself in a weak financial position and has potential projects run out of money by the end of 2027.
The agreement between Kroger and the unions, which was ratified by the workers concerned, was approved by the PBGC, the UFCW Consolidated Pension Plan and the Sound Retirement Trust. Kroger plans to meet its obligations under the agreement, which will amount to approximately $ 310 million after tax, over the next six years by paying even installments.
Kroger noted that future employee benefits would accumulate in a newly created variable pension plan managed by the Trust.
Millerchip said the agreement to transfer the pension funds would benefit its shareholders and also secure retirement benefits for its employees. “The proactive steps Kroger has taken over many years to address the significant underfunding problems of multi-employer pension plans enable us to continue to deliver strong and sustainable total return for shareholders,” Millerchip said in a statement.
The deal that Kroger made with grocery store workers in the northwest follows a tentative agreement Agreement reached between the grocer and Stop & Shop with the United Food and Commercial Workers (UFCW) International Union last July, under which the companies put in place a variable pension plan that includes 33,000 Kroger employees and 18,000 Stop & Shop employees. The grocers withdrew from a multi-employer pension fund under the agreement that includes Kroger and Stop & Shop contributions of $ 962 million and $ 649 million, respectively, to the UFCW Industrial Pension Fund.
Also last July, Albertsons signed a preliminary contract with the UFCW to set up a separate retirement plan with a variable pension.
In January, Giant Food announced that it is fully implemented an $ 800 million plan to combine multiple retirement plans into a single agreement.