The Kroger Co. and International Brotherhood of Teamsters (IBT) have ratified a new labor agreement that provides for Kroger’s withdrawal from the Central States Pension Fund. The new labor agreement covers associates represented by the IBT at three distribution centers and two dairy manufacturing facilities operated by Kroger.
Kroger and IBT say they have been working together for several years on a plan to protect the pensions of Kroger associates at these facilities, who are participants in the Central States Pension Fund. The Central States Pension Fund projects it will go insolvent in 2025.
Kroger and IBT have established a new fund, called the International Brotherhood of Teamsters Consolidated Pension Fund that is designed to provide Kroger associates with a secure pension.
Included in this agreement are current Kroger associates/IBT members working at facilities in Hutchinson and Goddard, Kansas; Houston, Texas; Memphis, Tennessee; Indianapolis, Indiana; and Livonia, Michigan. The total number of active associates covered is about 1,800. In February, Roundy’s associates working at a distribution center in Oconomowoc, Wisconsin, ratified the same agreement.
Kroger’s withdrawal from Central States Pension Fund was effective Dec. 10. Kroger’s withdrawal does not require the approval of Central States. Kroger will make payments to Central States to fulfill its withdrawal liability obligation.
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Under the ratified agreement, the benefits current associates have earned as participants of Central States will be protected, the company says. The new IBT pension fund will make up benefits that are reduced by Central States as a result of Kroger’s withdrawal, and should Central States become insolvent and benefits become reduced, the IBT Consolidated Pension Fund will restore benefit reductions above the level guaranteed by the Pension Benefit Guaranty Corporation (PBGC).
Moving forward, current associates also will begin earning a new pension benefit through a formula negotiated by Kroger and the IBT and ratified by members.
“Given the uncertain future of Central States and the potential adverse impact on our members, the National Committee felt the move to the IBT Consolidated Plan will ensure they have a stable and reliable retirement benefit in the future,” said Steve Vairma, IBT VP.
“This is a good agreement for our current associates and our company. It provides our current associates security for their future retirement and the company financial certainty regarding this important investment in our associates,” said Mike Schlotman, Kroger’s EVP and CFO.
In 2015, Kroger and IBT negotiated, and members ratified, an agreement that would have transferred Kroger associates and retirees from Central States to the new IBT fund. This transfer required the approval of Central States. The Central States Trustees have not agreed to the transfer. This led Kroger and the IBT to negotiate an agreement providing for Kroger’s withdrawal from Central States, while preserving the possibility of a transfer.