Supervalu issued a letter to retirees stating that may be asking the government for permission to bail out of their pension plan. What does this mean for employees and retirees?
Essentially, SVU will more than likely use the proceeds to fund further capital expenditures while paying down the debt which I think is quite wise if and only if they are getting a decent ROIC (hopefully better than what the pension plan could produce) in order to continue pension contributions in perpetuity. On a side relevent note: I sure wish SVU would give a break down on Save A Lot stores!
Similar to a country with entitlements such as the U.S. social security system, the country must grow in tandem with its increased benefit obligations to its people but the assumption calculations must be conservative and sound and most importantly, not be overly, unsustainably generous. I believe this same logic applies to pensions in general.
The U.S. system is solvent as long as our currency is accepted. The question is: How long others in the world will tolerate being forced fed excessive printing of dollars? Well, as long as they desire to continue doing business with this country, they really have no choice. I know there's much more to this discussion but my bitty eyes are getting hammered typing into this iPhone lol. The argument of gold as a replacement of paper currency is exhausting. I presented an arguement on this subject on Seeking Alpha. :)
Deferring all payments as long as legally permissible is sound business practice. Many companies cannot meet their pension obligations and as a result the laws regarding funding have been softened in the hope that something will come up. SVU simply is not one of the companies having problems meeting their obligations but as the laws apply to both the weak and the strong of course they will delay funding.
If you wish to have a discussion pension funding obligations or solvency of the overall financial system here in the US I'd say you could find a better place to do it than here but it is your decision as to where to go for this information.
I dont mean to offend anyone. This matter strikes close to me. In an effort to keep this anonymous, I will say this: A very close relative of mine is concerned with his pension but not with SVU, it's with another entity.
I want readers to be informed which is why I strongly suggest over and over to speak with HR.
Contribution payments could be delayed which is part of a process; however, definitely NOT a good one or a good sign; the pension liability alone is burdensome for SVU.
Am I an expert? I, again will not proclaim anything for myself, but I did make a phone call to an expert pension actuary who is another very close person in my life on this matter which I believe is serious one. Putting one's life into an organization only to see it possibly takien away is not funny; it's not something to joke a about. Only HR and the plan admin knows the severity of the issue.
I stress again, that already earned benefits cannot be cut unless it was negotiated by union members, for example. Future contributions can be cut or in this matter, delayed. However, I cannot say what is fact because, again, I do not know the company's plan documents or procedures.
Wow, you really present yourself as an expert? First of all the non-union pension plan is a single employer plan and secondly it is presently funded at the 70% level.
Read a snipnet from the letter they distributed
Funding Relief Notice for
SUPERVALU INC. Retirement Plan
This notice is being provided for informational purposes and you are not required to respond in any way.
The employer sponsoring your pension plan has made an election permitted under Federal law to delay funding for the plan. The election applies to the plan year beginning on January 1, 2011 and ending on December 31, 2011.
Without the election, Federal law generally requires that any increase in the amount by which the plan is underfunded for a plan year be paid off over 7 years. However, the election allows the increase in the amount by which the plan is underfunded for this plan year to be paid off in smaller annual payments over 15 years.
If you have any questions regarding this notice, you may contact:
P.O. Box 990
Minneapolis, MN 55440-0990
or, by calling the Associate Contact Center at 1.800.969.9688.
Remember, the article says "If certain procedures are followed".... this would indicate drastic measure are necessary or concessions must be made by the unions for benefit cutbacks which is usually the tipping point of whether the company files for bankruptcy or not.
SVU hasn't announced the fund is in "critical status".
The question must be asked on how does one define "subsidized early retirement benefit". Again, only HR and the pension admin officials knows the answer because they will have to refer to the plan document and procedure.
What's mainly affected are future contributions. Future contributions are anything that is keyword: unearned.
Most importantly, it says "workers will still get all earned benefits" at 62-65, but reduced if collected at an earlier retirement. You see, instead of worrying about this and relying on posts, one must much contact HR above anything else.
In YRC's case, the union agreed to cutbacks to save the company from bankruptcy. They didn't want to risk the company going under and the plan in the arms of the PBGC. Usually, it's in the best interest for the highly paid folks to avoid this route because the draconian cuts happen here with highly paid(s).
That isn't correct. Believe that multi-employer retirees prior to sometime in 2008 are protected from cuts, maybe all current retirees. I could look it up but given the level of dishonesty on this particular thread I am not inclined to do it.
Sorry, but once an obligation has been promised, it cannot be reneged unless the company's plan goes to PBGC. For a plan to go to PBGC, the company just went under.
NO ONE knows what the benefits will be after the plan goes to the PBGC because it is in the hands of the government. USUALLY, the most highly paid people with RICH benefits get drastically cut; the airline pilots was the prime example.
There will be pension cuts in the multi-employer plans in my opinion. Believe I posted a link to a particular fund that is in significant distress. That sort of support is far more than you have done and yes I have put my money where my mouth is in more ways than just being a participant in the very plan you now appear to be referring to.
Wait...now I see, you are talking about another plan???