In a move expected to reduce Kroger Co.’s annual pension contribution expense and secure pension benefits of more than 65,000 employees, the grocer will merge four of the UFCW/multiemployer pension funds into a new fund Jan. 1.
Kroger (NYSE: KR) expects to contribute about $650 million to the new fund in January 2012, pending market conditions, discussions with rating agencies and the approval of three remaining United Food and Commercial Workers local.
The company will take a 73 cents per share charge to earnings in the fourth quarter of 2011. The exact effect on net earnings per diluted share will depend on the amount contributed, the company said.
“Given the challenging environment that exists for pension plans today, we are pleased to have reached an agreement that provides a meaningful future benefit for Kroger associates who participate in these plans,” Mike Schlotman, Kroger’s chief financial officer, said in a news release. “The unique characteristics of these plans, coupled with our strong financial position and today’s low interest rate environment, give us the ability to contribute to the new fund in a manner that we expect to produce significant future savings.”
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