WASHINGTON, D.C. - The Pension Benefit Guaranty Corporation (PBGC) today announced it has reached a settlement agreement with the Food Employers Labor Relations Association (FELRA), the United Food and Commercial Workers union (UFCW), and the FELRA/UFCW Pension Fund (FELRA/UFCW plan), a severely underfunded multiemployer plan that covers approximately 50,000 grocery and warehouse workers and retirees in the D.C. metropolitan area. FELRA's two primary contributing employers are Giant and Safeway supermarkets. In January 2013, Giant, Safeway, and UFCW locals executed a series of actions that undermined the already financially troubled FELRA/UFCW plan.
"PBGC negotiated this settlement to protect participant benefits and safeguard the agency's troubled Multiemployer Insurance Program from additional financial stress," PBGC Director Gordon Hartogensis said. "The 2013 FELRA/UFCW arrangement threatened to increase costs needlessly both for PBGC's Multiemployer Insurance Program — already projected to run out of money in 2026 — and participants and employers in the other 1,400 multiemployer plans that pay PBGC premiums. Our new agreement delays the FELRA/UFCW plan's insolvency and also prevents PBGC's Multiemployer Insurance Program from going broke unnecessarily quickly."
In January 2013, the bargaining parties froze benefits under the FELRA/UFCW plan and created a new multiemployer plan for future benefit accruals called the Mid-Atlantic UFCW and Participating Employers Pension Plan (MAP). This weakened the FELRA/UFCW plan by diverting more than $100 million in contributions to MAP and accelerated the insolvency of the FELRA/UFCW plan. Absent this settlement, the FELRA/UFCW plan would have become insolvent in January 2021.
These actions needlessly threatened to place additional burdens on PBGC's Multiemployer Program. The reduction in employer contributions increased the amount of financial assistance that the FELRA/UFCW plan would require from PBGC's Multiemployer Program.
To address these concerns, the settlement agreement provides that MAP will combine with the FELRA/UFCW plan, which is expected to extend the plan's solvency by more than a year. Also, the FELRA/UFCW plan will be terminated by mass withdrawal, and Giant and Safeway will make withdrawal liability payments to the plan for 25 years totaling about $56 million annually. In return, the supermarket chains will be released from further withdrawal liability to the FELRA/UFCW plan. The withdrawal liability payments are expected to reduce the amount of PBGC financial assistance that the FELRA/UFCW plan will require when it becomes insolvent, which is now expected to occur in mid-2022.