Kroger Co., Cincinnati, plans to merge four of the defined benefit pension plans to which it contributes into a new fund effective Jan. 1, as part of an agreement with the United Food and Commercial Workers.
The firm entered into a “memorandum of understanding” with 11 of 14 UFCW locals to merge the four multiemployer funds into a single fund, according to its 10-Q filing Thursday.
Kroger employees represent 92% of the total active participants in the four funds.
The combined plan will have about $2.5 billion in assets, according to a statement Thursday from Mike Schlotman, CFO. Kroger expects to contribute about $650 million to the new fund in January pending approval of the three remaining locals and market conditions, giving the plan more than $3 billion in assets.
Kroger will be directly responsible for the investment and custody of the combined plan’s assets, according to Mr. Schlotman. Currently the four plans are managed jointly by UFCW and Kroger trustees.
The company has committed to a 95% funding ratio of the new plan on or before March 31, 2018.
The consolidation is being made to “provide greater stability of future benefits for Kroger associates, reduce administration costs and enhance the prospects for future returns,” according to a news release.