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The Kroger Co. has made changes in its participation in two multi-employer pension funds that the Cincinnati-based grocer said will provide greater stability of current and future benefits for Kroger associates, reduce administration costs and enhance the prospects for future returns.
Pending approval of the fund trustees and the Pension Benefit Guarantee Corp., Kroger has negotiated withdrawals from two multi-employer pension funds:
- The Washington Meat Industry Pension Trust, which covered 870 current and 840 retired Kroger associates, mostly in Washington state. Kroger will move the liability for pensions earned from this fund into the UFCW Consolidated Pension Fund that was established in December 2011. Pension liabilities for current associates’ future service will be earned in the Seattle-based Sound Retirement Trust, which includes the majority of Seattle-area store clerks.
- The Pace Industry Union-Management Pension Fund, which included 350 King Soopers pharmacists in the Denver area. These associates will now participate in a Kroger-sponsored 401k plan with matching benefits.
Kroger Contributes to Restructuring
Kroger has agreed to contribute $56 million, after-tax, to restructure these pension obligations. Because Kroger has made a commitment to fund this amount in the future, the majority of it over the next five years, the company will incur a charge in this amount to earnings for the first quarter of 2014.
“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.”
Kroger employs more than 375,000 associates at 2,640 supermarkets and multidepartment stores in 34 states and the District of Columbia under two dozen local banner names including Kroger, City Market, Dillons, Food 4 Less, Fred Meyer, Fry's, Harris Teeter, Jay C, King Soopers, QFC, Ralphs and Smith's.