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UFCW unions ratify Kroger, Albertsons, Stop & Shop pension fund withdrawal

Grocers say shift to variable annuity-based plan will reduce financial risk

Russell Redman

December 1, 2020

4 Min Read
Kroger Company deli clerk.jpg
For Kroger, the agreement to exit the UFCW national pension fund and move to a VAPP was ratified by 20 UFCW locals covering 33,000 associates across 14 divisions.Kroger

United Food and Commercial Workers (UFCW) unions representing employees at The Kroger Co., Albertsons Cos. and Ahold Delhaize USA’s Stop & Shop chain have ratified agreements to withdraw from the UFCW International Union-Industry Pension Fund.

The three supermarket retailers announced the union approvals late yesterday. Under tentative agreements unveiled in July, plans call for the UFCW locals to transition to variable annuity-based pension plans from their current national plan. The board of trustees of the UFCW’s national pension fund had already signed off on the agreements when they were announced. Kroger and Stop & Shop worked with UFCW to create the UFCW and Employer’s Variable Annuity Pension Plan (VAPP) to provide future pension benefits.

Executives from Kroger, Albertsons and Stop & Shop said the shift to VAPPs will strengthen the security of pension benefits for UFCW members while mitigating financial risk for the companies concerning pension costs.

“We are pleased to reach an agreement that improves the security and stability of future benefits for our associates and modernizes our retirement benefits offering,” Gary Millerchip, chief financial officer at Kroger, said in a statement. “In an environment where pensions are faced with funding challenges, our strong financial position permits us to invest in our associates.”

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

UFCW International President Marc Perrone called the pension agreement with Kroger, Albertsons and Stop & Shop "historic" and said the deal marks a "critical step" in providing grocery workers and their families with financial security.

"This agreement increases the contribution of grocery chains to employees' pension plan and will help to ensure that these hard-earned benefits will be there for our members when they retire," Perrone stated. "As COVID-19 cases skyrocket across the country, essential workers continue to serve their communities. Thousands of essential workers are still being exposed and infected every week as the hazards of this pandemic continue. Now more than ever, companies must invest in these hardworking men and women to ensure they have the hazard pay, essential benefits and strong financial security that they have earned as this pandemic rages on."

Albertsons-meat dept worker-COVID.png

Albertsons said nine UFCW locals ratified the withdrawal from the national pension plan.

For Cincinnati-based Kroger, the agreement to exit the UFCW International Union-Industry Pension Fund and participate in the new VAPP was ratified by 20 UFCW locals covering 33,000 associates across 14 divisions. Kroger said it will pay a pretax withdrawal liability of $962 million 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 VAPP. On an after-tax basis, the withdrawal liability and contribution to the transition reserve are expected to total about $760 million, which will paid by installments to the national pension fund over the next three years. 

Related:As holiday shopping surges, UFCW calls on retailers to strengthen COVID protections, reinstate hazard pay

Kroger noted that the agreement also sets a pension benefit formula for its contributions to the new plan through June 2028, fixing the terms of its collectively bargained pension obligation with the 20 UFCW locals for the next eight years and minimizing future exposure to market risk associated with the current plan.

“Kroger’s investment of nearly $1 billion to help secure and stabilize pensions for our associates is the most recent of several meaningful commitments we’ve made over the last decade to address the funding challenges facing associate pension plans,” according to Tim Massa, senior vice president and chief people officer at Kroger. 

Albertsons said nine UFCW locals ratified the withdrawal from the national pension plan and migration to the VAPP.  The Boise, Idaho-based grocer said it will pay approximately $286 million ($213 million after tax) in withdrawal liability to the union’s national plan in three installments over the next three years as well as pre-fund a transition reserve in the new VAPP with a payment of $8 million.

The new pension benefit formula fixes the company’s projected future pension costs through June 30, 2028, for the nine local unions, lowers financial risk and helps safeguard employee benefits, according to Albertsons.

“We are pleased with this agreement and value our partnership with UFCW to reach this positive outcome,” Albertsons Cos. President and CEO Vivek Sankaran stated. “We believe this protects past benefits earned and will provide quality future benefits for our employees, while reducing financial risk going forward.”

Quincy, Mass.-based Stop & Shop said it will be making a $667 million investment in pension benefits with union ratification of the agreement to migrate to the VAPP. The pact covers about 18,000 Stop & Shop workers who are members of UFCW Locals 1445, 1449, 328, 371 and 464A.

“We’re extremely pleased that this agreement has been ratified across the board,” Stop & Shop President Gordon Reid said in a statement. “By making this significant investment, we are doing the right thing for our associates who are dedicated to serving our customers every day.”

According to Zaandam, Netherlands-baed parent company Ahold Delhaize, Stop & Shop’s switch from UFCW’s national pension plan to the VAPP will “sustainably provide future retirement benefits and reduce financial risk to the company,” including “significantly reduced risk of plan underfunding and improved visibility on annual contributions.”

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

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

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