Marsh Lesson for Pensioners

According to Xania News:

As a grocery chain is dismantled, investors recover their money. Worker pensions are short millions.

The unpaid pension debts mean that some retirees will get smaller checks. Much of the tab will be picked up by the government’s pension insurer, a federal agency facing its own budget shortfalls.

“They did everyone dirty,” said Kilby Baker, 70, a retired warehouse worker whose pension check was cut by about 25 percent after Marsh Supermarkets withdrew from the pension. “We all gave up wage increases so we could have a better pension. Then they just took it away from us.”

Let’s take a closer look.

When Sun bought Marsh Supermarkets, the company had three retirement plans. One for the top five Marsh executives, one for the store employees, and one for the warehouse workers.

Only the executives’ plan, however, was fully funded under the sales agreement: With the completion of Sun’s purchase, Marsh’s top five executives were to be awarded $14 million in retirement payments, according to company financial documents. Among them: CEO Don Marsh at $7 million and corporate counsel P. Lawrence Butt at $2.2 million.

Meanwhile, the other two retirement plans — the worker pensions — were short millions of dollars.

The pension for store employees — deli clerks, cashiers, store managers — was underfunded by $32 million at the time of the bankruptcy. Most of that burden will be placed on the government insurer, the Pension Benefit Guaranty Corp., which will restore virtually all of what the 4,000 store employees entitled to pensions were owed in retirement.

The pension covering the company’s warehouse workers fared worst.

At the time of the bankruptcy, Marsh Supermarkets was behind in its obligations to that pension by $55 million, and because of the way that pension is organized, the shortfall is likely to help cause significant cuts to pension checks for retirees and accelerate financial woes of the government’s pension insurer.

The pension fund for Marsh’s warehouse workers is part of a Teamsters-affiliated fund known as Central States, which covers about 400,000 people. Even before the Marsh bankruptcy, Central States was running out of money, partly because so many trucking companies have filed for bankruptcy. More than $1.5 billion of the Central States pension shortfall can be traced to bankruptcy by companies owned by private-equity firms, according to the pension fund. It is expected to be insolvent within seven years.

The 5500 filings tell a slightly different story.

Th 401(k) was liquidated in August by a bankruptcy trustee and the Defined Benefit Plan for  those 3,876 employees is 90% funded (95% if you believe in actuarial value) though there are no benefit accruals:

Plan Name: Employee Pension Plan of Marsh Supermarkets, Inc. & Subsidiaries

EIN/PN: 35-0918179/001

Total participants @ 3/31/17: 3,876 including:

• Retirees: 1,679
• Separated but entitled to benefits: 1,376
• Still working: 821

Asset Value (Market) @ 4/1/16: 53,575,381

Value of liabilities using HATFA rate (6.02%) @ 4/1/16: $59,183,378 including:

• Retirees: $35,609,885
• Separated but entitled to benefits: $14,988,960
• Still working: $8,584,533

Funded ratio: 90.52%

Unfunded Liabilities as of 4/1/16: $5,607,997

Asset Value (Market) as of 3/31/17: $54,966,394

Contributions : $784,797

Payouts: $3,971,825

Expenses: $924,002