Union seeks to recover pension funds lost in Supervalu plant closing
Teamsters Union Local 491 has taken the first steps to recover what it says is $4 million in pension fund liability lost as a result of Supervalu’s closing its Belle Vernon warehouse facility. Vito Dragone, Local 491 secretary-treasurer, said in a press release Thursday the union’s board has given its permission to pursue the action to recover the loss.
“Our first step has been to send them (Supervalu) a demand letter to collect the money. If they don’t give it to us, then we will proceed to the next step. This is the first step in litigation,’ Dragone said.
The loss, he added, could affect as many as 3,000 teamsters, both active and retired.
Dragone explained the withdrawal liability is the difference between what investments have been paying into the fund and what obligations the fund must meet.
“When they ceased operations at Belle Vernon, we believe they violated the withdrawal liability in the amount of more than $4 million,’ he said.
Ray West, a Supervalu spokesman at the company’s Ohio region office, said he was not familiar with the matter: “The first I heard of this was about an hour ago, when another newspaper called.”
He referred questions to Paulette Dean at the company’s main offices. Dean said that “Supervalu has received the trustee request. We do not believe that we owe the money they requested. Our next step will be to provide a written response to the fund trustees, outlining our position.’
Dragone said he is “very concerned” about the financial effects of the July 27, 2002, shutdown of the Belle Vernon facility and termination of 309 jobs.
“This regrettable loss of employment is a personal tragedy to the many dedicated employees of Supervalu that is now being compounded by the company’s efforts to evade and avoid its financial obligation of over $4 million owed to their pension fund,” he said.
Three trustees appointed by Teamsters local unions and three trustees appointed by about 55 contributing employers jointly administer the pension fund. The multi-employer plan pays monthly retirement benefits to 1,500 retired teamsters from Locals 872, 491 and 453 in southwestern Pennsylvania and western Maryland and has promised benefits to another 1,400 members who have not yet retired.
The pension fund has assets that were valued at $114 million as of June 30, 2002; however, as of that date, the liability for promised benefits was $134 million, Dragone explained.
“To illustrate the difference one year can make, it should be noted that on June 30, 2001, the pension fund’s certified assets exceeded the liabilities for pension benefits, but just one year later, the plan had a $20 million shortfall,” Dragone said.
Since Supervalu accounted for 20 to 25 percent of the pension fund’s contributions, when it withdrew from the pension fund, its share of the shortfall under federal pension law was calculated to be $4,316,996, according to Dragone.
“Supervalu’s recent actions threaten the financial future of the pension fund and, in turn, affect the security of their retirement benefits, as well as the security of benefits promised to all other participants,’ he said.
Supervalu’s actions, he said, began to surface shortly before the closing of the Belle Vernon facility, when Supervalu workers were members of Charleroi-based Teamsters Local 872, which now has been merged into Local 585.
According to Dragone, Supervalu entered into an agreement with Local 872 that authorized the company to terminate pension coverage 28 days before the scheduled shutdown of the Belle Vernon facility, in exchange for severance packages for workers.
“The agreement represents an attempt by Supervalu to evade or avoid over $4 million in withdrawal liability owed to the pension fund by promising approximately $780,000 to employees who faced imminent loss of their jobs, all of which was done in violation of federal pension laws,’ he said.
The trustees of the pension fund unanimously found that the deal between Local 872 and Supervalu, allowing the grocery wholesaler to leave the fund June 29, 2002, “was struck for the purpose of enabling the company to disclaim responsibility for a share of the annual losses, which it knew were allocated to each employer annually each June 30, the last day of the fund’s fiscal year,” Dragone said.
According to Dragone, who serves as one of the pension fund’s trustees, Supervalu’s action does not comply with federal pension law, based on the investigation by the trustees.
“I am pleased that the trustees undertook a thorough investigation and recently determined that Supervalu is guilty of attempting to evade or avoid its rightful obligations, in violation of federal pension law,’ he said.
Dragone said that while “there is no question that at the present time the pension fund has the money to pay benefits many years into the future, the focal point of the trustees’ concern has been how to deal with Supervalu’s effort to shift its liabilities onto others.”