Dive Brief:
- Giant Food announced on Friday it has fully implemented its plan to combine several existing pension plans into a single agreement for past benefits, involving an $800 million investment by the grocer into past and future benefits.
- The “Combined Plan” was made in collaboration with United Food and Commercial Workers (UFCW) Locals 400 and 27 and impacts approximately 18,000 Giant Food staff who are members of the two unions.
- Unionized grocery workers in March of last year ratified the agreement, which is a variable annuity pension plan similar to plans separately agreed to by Kroger, Albertsons and Stop & Shop last year in discussions with the UFCW.
Dive Insight:
As Ahold Delhaize has done similarly with its Stop & Shop brand, the international grocery retailer is shoring up Giant Food’s finances and avoiding unnecessary risk exposure by transitioning to a new variable annuity pension plan. By freezing its previous plans and resolving Giant Food’s existing liabilities to them, further benefits cannot be accrued and the grocer mitigates its exposure to future market changes, according to a statement by the company.
Ahold Delhaize also said that Giant Food will create a multi-employer plan with Safeway, which is owned by Albertsons, to provide benefits to certain associates who were previously covered by its pension plans, before withdrawing its estimated $10 million stake “at some point during the next few years.”
Ahold Delhaize’s Chief Financial Officer Natalie Knight said during the company's earnings call in August that it expects free-cash flow in fiscal 2020 to reach just over $2 billion even with the pension plan withdrawals.
Knight also cited the company’s strong balance sheet, along with “getting all of the different participants to the table,” as having enabled them to move to variable annuity pension plans, which she said are part of the company’s “new approach on finance” on driving predictability in its costs in order to optimize overall investment.
