Great 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 more solid than it has been in a very long time.

What is a retirement pension? We all hope to retire after a lifetime of work with enough income to live with dignity and some degree of independence. While relatively few people these days have a monthly pension that is paid for life, it is something that we have been able to keep in place for our union grocery store workers. A solid retirement plan is made up of many sources: personal savings, Social Security and retirement/pensions and investments. Your retirement pension from your work at the grocery store is one of these sources.

This path to secure our retirement benefits under the Sound Retirement Trust (SRT) required many steps for the employers and the unions and over the last year we have continued to push forward along that path. Some of you may be near retirement after decades of work while others may have started at the grocery store in just the last few years. Whatever your situation, your pension is one of the most important ways to have income when you retire. Your employer begins making payments into your pension when you are hired, and you become vested in the pension plan typically after just 5 years of work in the stores.

While grocery store workers have successfully fought to keep our pensions under the SRT, for nearly twenty years it has had funding problems caused by two large economic crashes (in 2000 and 2008) and long-term changes in the industry. In 2019 our union bargaining team secured a tentative agreement to turn that around and members approved that plan at vote meetings. We have been working hard ever since to move through all the steps to implement this approved agreement. On July 1, 2021, we completed the final step to secure the pension funding.

How the Sound Retirement Trust Becomes Fully Funded:

As a result of our pension agreements and the changes described below, the SRT will become what is called “Green Zone” status and will stay in the green zone for the foreseeable future.

Under the 2019 bargaining, three changes were made to help secure your retirement benefits:

For Kroger Employees:

• All the benefit liabilities for all benefits earned for your work before July 1, 2021, under the SRT will be transferred to the UFCW Consolidated Fund. Kroger will contribute to the Consolidated Fund to pay for all of these liabilities within 7 years.

• When you retire, your pension benefits for your work before July 1, 2021, will be paid by the UFCW Consolidated Pension Fund.

For Other Employees:

• The current SRT will remain in place and continue to be funded for your work before July 1, 2021. The SRT will continue to get a regular contribution from your employer for every hour you work in the future.

• When you retire, your pension benefits for your work before July 1, 2021, will be paid by the SRT.

• For All Employees under 2019 Bargain:

• Future retirement benefits for your work on and after July 1, 2021 will be in one new fund called the Sound Variable Annuity Pension Plan (VAP).

• The Sound VAP will continue to get a regular contribution from your employer for every hour you work. The Sound VAP is sending you a notice about how the VAP works. Below are some basic rules about the VAP. When you retire, your will receive one check for your work before July 1, 2021 (from SRT or Consolidated Fund) and one check from the VAP.

Finally, all of your service credited and covered employment under the SRT and the VAP are counted under the other plan for all eligibility provisions. This ensures that you do not lose vesting or become ineligible for benefits under the SRT as a result of these changes. This includes eligibility for benefit options and the time periods for applying and determining qualification for a pension or disability benefit, participation and vesting purposes.

How the VAP System Works:

In the past, large or drastic declines in the stock market where the pension investments were made, resulted in reductions in the value of the SRT’s funding and reduction to the early retirement and other benefits. To help insulate grocery store workers’ future benefits from these drastic swings, the Variable Annuity Plan (VAP) is structured with a built-in safety mechanism so the benefits provided will track the VAP funding levels.

When the VAP’s investments in the stock market are doing well, and there are returns of over 8.5%, that extra money is required to go into the rainy-day fund reserve account, called a stabilization reserve. In a year where the returns from the pension plan’s investment drops below 2%, the benefits paid under the VAP are shored up with money from this stabilization reserve. The stabilization reserve also will be funded with an additional $15 million in 2022.

The “variable” part of the plan comes into effect with the returns are between 2% and 8.5%. For returns that are between 2 % to 5.5%, there can be adjustments downward in benefits. For years with returns greater than 5.5% up to 8.5%, there can be adjustment upwards. With these safeguards and adjustments, the VAP should stay fully funded in all market conditions and the benefits increase over time as wages increase. Long term, returns are expected to be at or over 5.5%.

Freeing Up Time and Money to Negotiate Wage Increases:

In 2019 and prior contract negotiations, months of time and effort were spent to negotiate agreements for tens of millions of dollars to try to address pension funding. While we will still need to negotiate contribution rates from the employer each bargain, with a healthy SRT and the security of the VAP, it is anticipated that the SRT and the VAP should not be underfunded again. And because we continue to manage our Health and Wellness Plan so well, we hope to maintain the Health Plan with no changes and no increased costs.

Now that we have successfully addressed the pension and health benefits, we can take the time and energy of the bargaining team with the employer representatives and focus on the member’s top priorities: 1st and foremost increased wages, and also look to other improvements in the contract for training, staffing and additional ways to improve the workplace.

The amount someone gets at retirement depends on many things. If you have a question about your specific pension benefits, when you are vested, or other topics, please call our grocery store workers’ retirement plan administrator, Zenith, at 206-282-4500 or 800-225-7620, press option 2, then press option 3.