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?
Well, I don't know if there actually was a letter or what it says but I can make the following points:
1) The plan is not SVU's, they are merely one of many employers. The employers typically have a small voice on the board of such plans but the unions are the ones who really call the shots.
2) If the multi-employer pension board is incompetent or corrupt then yea I can see them stepping in to ask the Federal government to intervene or simply stop participating. Lets face it, labor relations in the Northeast are blood sport. If there was a letter as you indicate, I'd be willing to bet large sums of money that it is one of the northeast ops.
As the benefits are modest I think most retirees would be pretty well protected by the Pension Benefit Guarantee Corp. Higher paid retirees would have to take a hit.
Can you post the entire letter? I can generally figure things out and while this is a seriously distressed plan I tend to doubt it is about to be taken over by the govt.
The letter is about 8 pages long. It states that the company is considering delaying paying into the plan for 2011 (must pay back over 15 years). The more disturbing part is the talk about distressed termination. Go to www.pbgc.gov for more information on the issue.
Quick Pension Facts:
#1) If the pension is going into termination (which takes several years to wind down), the company must immediately fund the unfunded difference. As of the last 10K, the unfunded status is $1,019,000.00. SVU cannot terminate; they do not have the money to do it at the moment.
#2) A plan going into "distressed termination" is a company going into imminent bankruptcy. SVU is not going into imminent bankruptcy in the near term.
#3) The option (depending on SVU's plan documents which could many numerous of them) is to freeze the plan.
However, IT IS POSSIBLE for the wrong paperwork to be sent to participants due to *cough* incompetent admin associates; if this is the case, you should expect an apology letter or contact your HR for further clarification.
the union- labor local 1245 management pension plan IN CRITICAL STATUS, money pension benefit guaranty corp. PBGC' 100% 11$PBGC 75% NEXT 33$ MAXIMIM Guarantee's 35.75 per month x years of service.benefit eye teeth health care gone.thank you super-value for closing most of the stores that is the end results
If they have filed with the government there is a very good chance that your pension will be cut. The goverment can reject the filing however, unless SVU files for bankrupcy. Then your pension would be in the governments care and most likely your payment reduced. Sorry
A letter was sent from Supervalu to retirees. They stated that they had the option to claim "distressed termination" of the pension plan. Apparently if they can prove they can no longer fund it and still stay in business, they ask the government to take the plan over.
It means that the company negotiators really screwed up in signing long term retirement contracts. Only business idiots predict future company growth with any accuracy.
Labor contracts should always be open for review every year based on profits.
Go to last SVU conf call on Seeking Alpha. Use the key word search and type in pension. There are several highlights. One specifically notes their liabilities. SVU appears to have slightly higher pension obligations than SWY relative to sales or employees. But doesn't seem to be huge difference? Note SWY's market valuation and their pension obligation. Seems like mkt valuations are bigger difference than the pension obligations? SVU also notes they have modified their pension benefits/obligations going forward. SVU is interesting and complicated investment idea.
TOL (thinking out loud)
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???