In a move to save 1800 Kroger workers’ retirements, the grocery retailer is exiting the Teamsters Central States Pension fund, which is headed for financial failure.
As the Teamsters’ Central States Pension Fund continues to head closer toward insolvency, Kroger, one of the nation’s few large grocery retailers with unionized workers, has negotiated an agreement with the Teamsters to remove 1,800 workers at three distribution facilities from the failing plan.
“Kroger and IBT have been working together for several years on a plan to protect the pensions of Kroger associates at these facilities,” according to Progressive Grocer, “who are participants in the Central States Pension Fund, which is expected to become insolvent in 2025.”
The retailer and the union 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.
Fund losing $2 billion per year.
The Central States Pension Fund–which covers over 400,000 current and future retirees across the country–is “headed for financial failure,” according to a 2015 letter to plan participants from Thomas Nyhan, the fund’s administrator.
…like many of our nation’s multiemployer pension funds, Central States Pension Fund has become severely underfunded and is headed for financial failure if we do not take immediate, decisive action. Baby Boomers are retiring in record numbers and the union workforce has been steadily declining for years. As a result, the Fund currently has more than three times as many retirees as active members — so fewer contributions are coming in than benefits being paid out. To put this into perspective, for every $3.46 that the Fund pays out in pension benefits, only $1 is collected from contributing employers, which results in a $2 billion annual shortfall. Clearly, that math will never work. [Emphasis added.]
While the Central States Pension Fund had lost billions from investing billions in the stock market prior to the 2007-2008 recession, it was already in a downward spiral due to many of its unionized employers in the trucking industry having gone out of business.
The failure of so many unionized trucking companies came, in large part, as a result of Democrat President Jimmy Carter’s signing of the Motor Carrier Act in 1980, which de-regulated the trucking industry.
This deregulation, along with high-cost Teamster contracts, allowed non-union trucking companies to enter the interstate trucking industry and underbid union carriers, causing many to go out of business.
Kroger’s withdrawal from the Central States Pension Fund was effective Dec. 10. and does not require the approval of Central States’ trustees, according to Progressive Grocer.