Good news for your retirement benefits. We wanted to share some fabulous news: after more than a decade of work, as of July 1, 2021, we have secured our retirement plans and their future funding is stronger than it has been for a very long time.
What is a retirement pension? We all hope to retire from a working life with sufficient income to live with dignity and some degree of independence. While relatively few people have a monthly pension paid for life these days, this is something we have been able to keep in place for our unionized grocery store workers. A strong retirement plan is made up of many sources: personal savings, Social Security and retirement / pensions and investments. One of those sources is your retirement pension from working at the grocery store.
This path to securing our pension benefits under the Healthy Retirement Trust (SRT) has required many steps for employers and unions and over the past year we have continued to move forward on this path. Some of you may be on the verge of retirement after decades of working, while others may have started working at the grocery store in the past few years. Whatever your situation, your annuity is one of the most important means of earning income in retirement. Your employer starts making retirement payments when you are hired, and you become vested in the pension plan usually after only 5 years of working in stores.
While grocery store workers have fought successfully to keep our pensions under SRT, for almost twenty years it has experienced funding problems caused by two major economic crashes (in 2000 and 2008) and long term changes. in industry. In 2019, our union bargaining team secured an agreement in principle to turn the tide, and members approved the plan at voting meetings. Since then, we have worked hard to complete all stages of the implementation of this approved agreement. On July 1, 2021, we took the last step to secure the funding of the pension plan.
How the Healthy Retirement Trust is fully funded:
Due to our pension arrangements and the changes described below, the SRT will become what is known as “green zone” status and will remain in the green zone for the foreseeable future.
As part of the 2019 negotiations, three changes were made to help you secure your pension benefits:
For Kroger employees:
• All benefit liabilities for all benefits earned for your job prior to July 1, 2021, under the TRS will be transferred to the UFCW Consolidated Fund. Kroger will contribute to the Consolidated Fund to pay off all of these liabilities within 7 years.
• When you retire, your retirement benefits for your work prior to July 1, 2021 will be paid by the UFCW Consolidated Pension Fund.
For other employees:
• The current SRT will remain in place and will continue to be funded for your work prior to July 1, 2021. SRT will continue to receive a regular contribution from your employer for every hour you work in the future.
• When you retire, your retirement benefits for your work before July 1, 2021 will be paid by SRT.
• For all employees under the 2019 contract:
• Future retirement benefits for your work from July 1, 2021 will go into a new fund called the Sound Variable Annuity Pension Plan (VAP).
• The Sound VAP will continue to receive a regular contribution from your employer for each hour of work. The Sound VAP sends you a notification about the operation of the VAP. Below are some basic rules about VTBI. When you retire, you will receive a check for your work by July 1, 2021 (from the SRT or the Consolidated Fund) and a check from the VAP.
Finally, all of your credited service and employment covered under SRT and VAP count in the other plan for all eligibility provisions. This ensures that you do not lose acquired rights or become ineligible for benefits under the SRT as a result of these changes. This includes eligibility for benefit options and time periods for the application and determination of eligibility for a retirement or disability benefit, for participation and vesting purposes.
How the VAP system works:
In the past, large or drastic declines in the stock market where retirement investments have been made have resulted in reductions in the value of SRT funding and a reduction in early retirement and other benefits. To help isolate the future benefits of grocery store employees from these drastic fluctuations, the Variable Annuity Plan (VAP) is structured with a built-in safety mechanism so that the benefits provided will follow the funding levels of the VAP.
When VAP’s investments in the stock market are doing well and returns exceed 8.5%, this extra money is needed to go into the fund’s reserve account for rainy days, called the stabilization reserve. In a year when the investment returns of the pension plan fall below 2%, the benefits paid under the VAP are funded by money from this stabilization reserve. The stabilization reserve will also be funded with an additional $ 15 million in 2022.
The “variable” part of the plan comes into effect with returns of between 2% and 8.5%. For returns between 2% and 5.5%, there may be downward adjustments in benefits. For years with returns above 5.5% up to 8.5%, there may be an upward adjustment. With these safeguards and adjustments, the VAP is expected to remain fully funded under all market conditions and the benefits will increase over time as wages increase. Over the long term, returns are expected to be equal to or greater than 5.5%.
Free up time and money to negotiate salary increases:
In 2019 and in previous contract negotiations, months of time and effort went into negotiating deals worth tens of millions of dollars in an attempt to sort out pension funding. While we still have to negotiate employer contribution rates at every negotiation, with a healthy SRT and the security of the VAP, it is expected that the SRT and VAP will no longer be underfunded. And because we continue to manage our health and wellness plan so well, we hope to keep the health plan unchanged or increased in costs.
Now that we have successfully settled the pension and health benefits, we can take the time and energy of the negotiating team with employer representatives and focus on the member’s top priorities: first and above all an increase in wages, and also consider other improvements to the contract for training, staffing and other means of improving the working environment.
The amount a person receives upon retirement depends on several factors. If you have a question about your specific pension benefits, when you are vested, or other matters, please call our Grocery Employee Pension Plan Administrator, Zenith, at 206-282-4500 or 800-225- 7620, tap option 2, then tap option 3.