Kroger Co. ratified an agreement to withdraw from the United Food and Commercial Workers International Union-Industry Pension Fund and contribute to a new variable annuity pension plan, the company said.
Similar agreements were ratified by Stop & Shop Supermarket Co. and Albertsons Cos. The tentative agreements were announced in July.
The grocers and the UFCW created the UFCW and Employer's Variable Annuity Pension Plan for future benefits, with a pension benefit formula good through June 2028, when future contributions will be subject to negotiation with the union and 20 UFCW local unions.
The UFCW International Union-Industry Pension Fund, Mokena, Ill., had $6.1 billion in assets as of June 30, 2019, and was 53.5% funded, according to the most recent Form 5500, which showed 83,656 participants, mostly active. Kroger and Stop and Shop are listed as the largest annual contributors, at $44.7 million and $23.4 million, respectively, followed by Albertsons at $10.6 million.
"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, Kroger's chief financial officer, said Monday in a news release. "In an environment where pensions are faced with funding challenges, our strong financial position permits us to invest in our associates."
In addition to paying a withdrawal liability of $962 million to the existing pension fund in installments, Kroger will contribute $27 million to a transition reserve in the new variable annuity pension plan. On an after-tax basis, the withdrawal liability and reserve contribution amount to $760 million.
Tim Massa, Kroger senior vice president and chief people officer, said in the same news release that the pension fund contributions and withdrawal liability are in addition to more than $1 billion spent since March to reward associates and implement COVID-19 safety measures.
UFCW International President Marc Perrone said in an emailed statement that the historic agreement with the grocers “is a critical step to ensuring that these brave workers have the financial security they need to provide for their families.”
With COVID-19 cases rising, “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,” Mr. Perrone said.