Kroger Withdraws from Central States Pension Fund

Supermarket chain sets up new fund in labor deal with Teamsters.

Supermarket chain owner The Kroger Co. has signed a new labor agreement with the International Brotherhood of Teamsters (IBT) that allows the company to withdraw from the Central States Pension Fund, which projects it will become insolvent by 2025. The new labor agreement covers associates represented by the IBT at three distribution centers, as well as two dairy manufacturing facilities operated by Kroger.

“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, International Brotherhood of Teamsters vice president, in a release.

Kroger and IBT have established a new fund called the International Brotherhood of Teamsters Consolidated, which the two said is designed to provide Kroger associates with a secure pension. Included in this agreement are approximately 1,800 current Kroger associates/IBT members working at facilities in Houston, Memphis, Indianapolis, Livonia, Michigan, and Hutchinson  and Goddard, Kansas. 

Under the ratified agreement, the benefits current associates have earned as participants of Central States will be protected, said Kroger and IBT.  The new pension fund will make up benefits that are reduced by Central States as a result of Kroger’s withdrawal. If

Central States becomes insolvent and benefits are reduced, the IBT Consolidated Pension Fund will restore benefit reductions above the level guaranteed by the Pension Benefit Guaranty Corporation (PBGC).

Participants also will begin earning a new pension benefit through a formula negotiated by Kroger and the IBT, which was ratified by members.

“This is a good agreement for our current associates and our company,” said Kroger CFO Mike Schlotman in a statement. “It provides our current associates security for their future retirement and the company financial certainty regarding this important investment in our associates.”

In 2015, Kroger and the IBT negotiated a deal that would have transferred Kroger associates and retirees from Central States to the new IBT fund.  This transfer required the approval of Central States, which did not agree to it. 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.

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