Sponsored By

Kroger, Albertsons, Stop & Shop to withdraw from UFCW national pension fund

Tentative pacts with union locals call for shift to variable annuity-based retirement plan

Russell Redman

July 21, 2020

5 Min Read
Kroger Marketplace store banner-closeup.jpg
Kroger said its agreements with 20 UFCW locals would allow 33,000 Kroger Co. associates across 14 divisions to participate in the new variable annuity pension plan.The Kroger Co.

The Kroger Co., Albertsons Cos. and Ahold Delhaize USA’s Stop & Shop have reached tentative agreements with United Food and Commercial Workers (UFCW) union locals to withdraw from the UFCW International Union-Industry Pension Fund.

Plans call for the UFCW locals to transition to variable annuity-based pension plans from their current national plan, the supermarket retailers said late Tuesday. The board of trustees of the UFCW’s national pension fund have approved the agreements, while union ratification is pending.

Cincinnati-based Kroger said its agreements with 20 UFCW locals cover 40 separate contracts and would allow 33,000 Kroger Co. associates — including most meat and deli clerks and some retail clerks — across 14 divisions to participate in the new variable annuity pension plan (VAPP). Stop & Shop’s pacts with five UFCW locals cover 18,000 employees. Albertsons said it reached agreements with nine UFCW locals but didn’t report the number of employees affected.

Kroger, Albertsons and Ahold Delhaize USA, the parent of Quincy, Mass.-based Stop & Shop, said the shift to VAPPs will bolster the security of pension benefits for the UFCW members while reining in financial risk for the companies concerning pension costs.

Albertsons banner closeup.png

Albertsons said the company and the nine UFCW union locals aim to establish their new VAPP by Oct. 31.

“In an environment where pensions are faced with funding challenges, we are pleased to have reached a tentative agreement that will protect benefits for our associates,” Kroger Chief Financial Officer Gary Millerchip said in a statement. “Our strong financial position is allowing us to make this investment in our associates and support our commitment to deliver sustainable and attractive total shareholder returns by addressing future pension cost increases and minimizing Kroger’s future exposure to market risk associated with the current pension plan.”

Related:UFCW, Democratic senators call on retailers to reinstate hazard pay for grocery workers

Upon union approval of the agreements, Kroger said its expects to pay a withdrawal liability of $962 million (pretax) to meet obligations for past service for associates and retirees in the national pension plan, as well as make a $27 million contribution to a transition reserve in the new VAPP. On an after-tax basis, the withdrawal liability and contribution to the transition reserve total approximately $760 million.

Ahold Delhaize pegs its liability for Stop & Shop’s withdrawal from the UFCW national pension fund at $649 million (pretax). The company said it will make an $18 million contribution to the new VAPP. On an after-tax basis, the payments will total about $500 million. The pacts with Stop & Shop cover UFCW Locals 1445, 1449, 328, 371 and 464A.

Related:UFCW calls for nationwide face-mask requirement

Albertsons, based in Boise, Idaho, said it will pay approximately $286 million ($213 million after-tax) in withdrawal liability to the UFCW national plan and pre-fund a transition reserve in the new VAPP with a payment of $8 million to $9 million.

Stop Shop store banner-shopping carts.jpg

If the union locals ratify the agreements, Stop & Shop and Kroger would work with UFCW to form the UFCW and Employer's Variable Annuity Pension Plan to provide future pension benefits.

All three retailers said they will make the payments to the UFCW national pension fund in several installments over the next three years.

“We are pleased with this agreement,” commented Vivek Sankaran, president and CEO of Albertsons Cos. “We believe this protects and provides the right benefits for our employees, while reducing financial risk going forward.”

UFCW International President Marc Perrone called the agreements with the three grocery retailers "historic."

"America's grocery workers are putting themselves in harm's way every day of the COVID-19 pandemic. Today's historic tentative agreement that UFCW secured with Kroger, Albertsons, and Stop & Shop is a critical step to ensuring that these brave workers have the financial security they need to provide for their families," Perrone said in an email statement. "This agreement will help to ensure that, for grocery workers across the country, these hard-earned benefits will be there when they retire. As millions of frontline workers continue to serve their communities during this pandemic, it is more important than ever that all companies invest in these hardworking men and women and ensure they have the financial security they have earned."

Under the pension plan transition, Kroger and Stop & Shop would work with UFCW to form the UFCW and Employer's Variable Annuity Pension Plan to provide future pension benefits. Ahold Delhaize said it expects union ratification of the agreements by Oct. 1. According to Albertsons, the company and the UFCW locals aim to establish the new VAPP by Oct. 31.

“This new plan is designed to protect the benefit accrual of participants, with a significantly reduced risk of plan underfunding and improved visibility on annual contributions,” Zaandam, Netherlands-based Ahold Delhaize stated.

In a message to members late Tuesday, UFCW Local 464A President John Niccollai said the agreements with Ahold Delhaize, Albertsons and Kroger would provide a funding infusion of $1.84 billion into the national pension plan. UFCW 464A, based in Little Falls, N.J., maintains its own pension fund for the majority of the membership but participates in the national plan for full-time employees of Stop & Shop in Long Island, N.Y., and Acme (Albertsons) in New York and New Jersey. 

"The national pension fund has been negatively affected by the tech bubble, the stock market crash of 2007-2008 and now the COVID pandemic. In order to protect you, the participant, and allow the plan to be well-funded for many years to come, the parties tentatively accepted the $1.84 billion employer contribution," Niccollai told members. "A new future service plan would be established similar to the current plan requiring that returns from investments may be lower to maintain benefits. A bridge to transition members to the new plan with minimal disruption, maintaining current contributions, has been established. We view what has occurred here as taking a potential disaster and turning it into a positive for all those involved."

Ahold Delhaize, Albertsons and Kroger noted that they all will nullify their planned withdrawals from the UFCW national pension plan if any of the UFCW local unions don’t ratify the agreement.

The three retailers said they expect their regular contributions to the planned new VAPP to be about the same as their current contributions to the UFCW national plan. All three companies added that the new agreement would fix the terms of their pension benefit contribution through the end of June 2028.

*Editor's Note: Article updated with comment from UFCW International.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

Stay up-to-date on the latest food retail news and trends
Subscribe to free eNewsletters from Supermarket News

You May Also Like