By Nick Thornton
The Kroger Co. announced Wednesday a restructuring of its pension obligations, divesting from two multi-employer pension funds in a move that will affect the retirement plans
of more than 2,000 employees.
The Cincinnati-based retailer, which operates more than 4,000 stores under various names, said the move will reduce administration costs and enhance the potential for future returns on the assets invested.
A final decision to withdraw from the two MEPs will have to be approved by the Pension Benefit Guarantee Corporation and the funds’ trustees.
Kroger will contribute $56 million after-tax dollars to restructure the affected employees retirement funds.
Kroger is withdrawing from the Washington Meat Industry Pension
Trust, which covered 870 current and 840 retired Kroger employees, most in Washington state. Funds already earned will be moved into the UFCW Consolidated Pension Fund, established last December of 2011. Liabilities going forward for current employees will be invested in the Sound Retirement Trust.
The super-market giant is also leaving the Pace Industry Union-Management Pension Fund, which supported approximately 350 pharmacists in King Soopers stores around the Denver area. Those employees will participate in a Kroger-sponsored 401(k) plan.
Kroger’s defined contribution plan is considered fairly generous by current trends, which have many companies clawing back matching contribution rates. Kroger matches 100 percent of workers’ contributions up to 3 percent of their salary, and 50 percent of the next 2 percent of the salary contributed. It will also pay a 1 to 2 percent contribution based on employee tenure.
"We are pleased to have reached agreements to help secure pension benefits that more than 2,000 associates have earned and to provide a future benefit that is competitive and affordable," said Mike Schlotman, Kroger's chief financial officer. "We intend to continue looking for opportunities to leverage our strong financial flexibility to safeguard our associates' benefits
, increase certainty and control over future pension obligations, and continue delivering strong shareholder value."
Originally published on BenefitsPro.com