Albertsons/Safeway to Pay $575M in Pension
The UFCW threatened strike which delivered for underfunded pension plan
The United Food and Commercial Workers (UFCW) have gone toe-to-toe with Billionaire Steve Feinberg, the boss at Cerberus Capital Management a vulture capitalist buyout fund and won. Cerberus, which owns the supermarket giant Albertsons has announced that they are giving in to the UFCW’s demands and will make a massive $575 Million contribution to shore up their underfunded pension plan.
The pension plan covers some 50,000 supermarket workers at the grocery giant who works in the Mid-Atlantic states. The first of its kind agreement means that the company will begin paying $23 Million a year for the next 25 years into the Pension Benefit Guaranty Corp. Currently, the company pays about $4 Million a year into the fund so this would be a $19 million increase. According to experts without the infusion of money, the underfunded $1.7 Billion plan was projected to go bust next year.
The deal was announced on Friday as Albertsons filed their initial public offering (IPO). In addition to Albertson supermarkets, the company owns Safeway, a chain of supermarkets in the Mid-Atlantic. Safeway employees, who are members of UFCW Local 400, negotiated the increase in their new collective bargaining agreement which was approved last week.
In an emailed statement to DCist, Mark Federici, President of UFCW Local 400, said,
“These negotiations were long and unusually complex due to the difficult pension issues we needed to resolve, but I am pleased to say we were able to reach a tentative agreement with Safeway that preserves retirement security for our members. This would not have been possible without a united union membership willing to take a stand for the fair contract they have earned. I couldn’t be more proud of our members at Safeway."
The deal was a little surprising for people who follow Feinberg, who had to be bailed out by the government after his investments in Chrysler and GMAC went belly up in 2008. As recently as January, Albertsons said that the company would not pay the underfunded portion of the pension plan. Of course, facing a strike from their 10,000 DC area Safeway workers the company blinked and ponied up the money.