Viewpoints

Kowalski’s and Its Workers Save for Retirement

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Last week’s failed recall of Wisconsin Gov. Scott Walker put the spotlight once again on the challenges created by the costs of legacy pension plans, an issue that has surfaced over and over around the country in relation to both private-sector and public-sector unions.

Walker and other business and government leaders have sought to reduce their liabilities for such plans, especially as the weak economy has reduced revenues and stalled the growth of the plans’ investments.

In Wisconsin’s neighboring state of Minnesota, however, a group of food retailers and their union local have reached an agreement that both preserves retirement benefits for workers and eliminates the risk for employers.

Retailers in the St. Paul market — including Kowalski’s, whose workers last week ratified a new, one-year contract after nearly a year of negotiations — have eliminated their defined-benefit pension plan and switched to funding a 401(a) and 401(k) plan jointly operated by United Food and Commercial Workers Local 1189. Kowalski’s has agreed to contribute as much as about $2 per hour for some workers, while the employees themselves can contribute as with any 401(k) plan.

“Our members wanted something they could do with their own money,” Don Seaquist, president of the local, told SN last week, adding that workers also liked the idea that the plan is portable and jointly managed by the union instead of by the retailers alone.

The union had been operating the plan as a supplemental retirement savings vehicle since 1998.

“Having it as a supplemental plan, we liked it very much,” Seaquist said. “I’m not thrilled with it being the only vehicle for people.”

But, he noted, the local retailers are still contributing significantly, which is better than the situation of many employees whose companies have slashed or eliminated pensions.

“[The employers] see the savings on the liability side, where it never builds up if it’s underfunded,” Seaquist explained. “It’s just shifting the risk from the employer to the employee.”

Seaquist said he believes his UFCW local is among the first to switch to such a plan as the primary retirement plan for members.

While certainly not ideal for workers, the new retirement-savings vehicle has the potential to keep both the employees and their employers in better financial shape over the long haul. And, perhaps even more importantly, it reflects a spirit of collaboration between the two sides that was lacking in the state next door.

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David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Carol Angrisani

Carol Angrisani is an associate editor at Supermarket News. Along with covering the packaged goods beat, she also manages SN’s annual private-label and ethnic marketing supplements. Carol...
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