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USA: Private equity firm Cerberus and Albertsons-Safeway allegedly refusing to protect workers' pension benefits; incl. response from Albertsons

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Company non-response
14 January 2020

Cerberus Capital Management did not respond

Company response
10 January 2020

Response from Albertsons

Author: Albertsons

... We are proud to be a unionized Company that takes care of our employees... A key point of focus in our negotiations is the funding of multiemployer defined benefit pension plans.  The two Pension Plans to which we currently contribute are extremely costly relative to our competition.  Yet, despite the very high cost, like many multiemployer pension plans across the country, these Plans are still scheduled to go insolvent in the future. 

... [O]ur main goals in these negotiations are (1) position our Company to compete moving forward in this rapidly changing market, while (2) simultaneously rewarding our employees with an excellent overall wage and benefit package. To accomplish these goals, we have proposed (a) substantial annual wage increases for our employees; and (b) on pension benefits, significantly increasing our contributions from the current level. Under our proposal, these substantial increases will be used to establish a “top up plan” to pay for past service benefits that exceed the PBGC maximum insurance amount and then establish a new defined benefit pension plan for future service benefits... The key sticking point in negotiations is the insistence by the UFCW locals that the Company pay pension benefits the PBGC is obligated to pay, but does not pay, if the PBGC becomes insolvent. These are difficult issues, but we are committed to remain at the bargaining table to work through our challenges and reach an agreement that rewards our tremendous employees.   

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6 November 2019

Private equity’s biggest retail gamble: Albertsons-Safeway

Author: Private Equity Stakeholder Project & United Food & Commercial Workers Local 400

Albertsons-Safeway, owned by Cerberus Capital Management, is the largest private equity-owned company and the second largest grocery chain in the United States... While Cerberus paid itself, Albertsons-Safeway is now refusing to keep its promise to protect workers’ benefits. In the process of renegotiating its union contract with employees in the Washington, DC and Baltimore metro areas, Albertsons-Safeway is refusing to honor a commitment it made to continue to ensure employees receive promised pension benefits... Safeway’s main competitor in DC, Giant Food, has committed to paying employees’ pension benefits.

... Albertsons-Safeway workers should not pay for Cerberus’ actions, especially as the private equity firm continues to pay itself. Safeway workers in the Washington, DC and Baltimore metro areas are standing up to demand that Cerberus and Albertsons-Safeway keeps their promise to workers and the Washington, DC and Baltimore communities.

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6 November 2019

Report: Private equity greed threatens Safeway workers’ retirement

Author: UFCW Local 400

Cerberus Capital Management, the private equity firm that owns Albertsons-Safeway, is trying to make workers in the Washington, D.C. and Baltimore areas pay the price for their high, unsustainable debt load and corporate greed, according to a new report by the Private Equity Stakeholder Project and UFCW Local 400. In its current bargaining with members of United Food & Commercial Workers (UFCW) Locals 400 and 27, Cerberus is refusing to honor Safeway’s previous commitment to secure pension benefits.

... Among the report’s findings:

  • Albertsons-Safeway has paid Cerberus and other owners almost $350 million in fees and dividends between 2013 and the end of 2018.
  • In June 2017, Albertsons-Safeway paid out a $250 million dividend to Cerberus and other owners, financing the dividend in part by selling the real estate under its stores to a third party and then leasing it back.
  • During this same period, Cerberus was charging “advisory” and “transactions” fees to Albertsons-Safeway, which cost the company at least $95 million for the period of 2013 to 2018.

... “If Cerberus can find a way to pay dividends to its shareholders and make Albertsons-Safeway come up with exorbitant management fees, it surely possesses the resources to keep the company’s promises to current and future retirees,” [UFCW Local 400 President Mark P.] Federici said. “It’s not a matter of money — it’s a matter of priorities, values and morals.”... The role of private equity in undermining the living standards and destroying the financial security of workers all across the country has come under growing scrutiny from lawmakers, the media, and the public.

Read the full post here