They helped build Save Mart in California. Now retirees feel betrayed by sudden benefit cut
When Save Mart ended 70 years of family ownership with the sale of the Modesto-built grocery chain in late March, its new management promised to keep the company’s family feel.
But less than a month later, some of Save Mart’s longest-serving employees are finding themselves suddenly outside of the family and losing a long-promised benefit in their golden years.
In late April, retired nonunion employees of The Save Mart Companies various brands, including the some 200 Save Mart, Lucky California and FoodMaxx stores across Northern California and Northern Nevada, received letters saying their supplemental health care benefits would stop at the end of June.
“I always felt like I was working for a family. That was the nice part about working with Save Mart. Bob (Piccinini, the longtime CEO of the company who passed away in 2015) was very good to us. In turn, we were extremely good to him,” said 40-year Save Mart employee Kathy Baker, who retired in 2017 as the company’s senior director of operations. “So that this would happen to us now makes me very sad and upset. This was something that was guaranteed to us.”
In late March, The Save Mart Companies announced its acquisition by Los Angeles-based private equity firm Kingswood Capital Management LP. It named former Albertsons supermarkets and Jacksons convenience chain executive Shane Sampson as its new executive chairman. Before the acquisition, the company’s website reported its annual sales were about $5 billion.
At the time, Sampson told The Modesto Bee, “It’s still a family of stores. Maybe it’s not family-owned, but it’s still a family of stores. and our 14,000 associates are part of that family.”
Some retirees losing $1,000 a month
Since at least the 1980s, Save Mart has provided its nonunion employees who retire after decades with the company some form of health care benefits. In recent years, that has meant allotting retirees up to $1,000 per month — $500 for themselves, $500 for their spouses — to help defray health care costs.
The money went into a health reimbursement arrangement (HRA), which also oversaw their insurance plans if they were under the age of 65. The benefit continued after retirees reached 65 and qualified for Medicare but was reduced to up to $600 per month.
But in late April, a letter went out to hundreds of former employees announcing an end to the benefit for all former workers and for existing employees who would qualify when they retired. The letter said their final allotment of HRA funds would go out in June and the final day of that month would also be the deadline to incur qualifying medical expenses to be reimbursed by those funds. The deadline to file claims for those expenses is listed as Dec. 31, 2022.
The Save Mart Companies spokeswoman Victoria Castro gave The Bee a written statement about the decision. She said the letter about the change went out to some 420 employees, or about 3% of the company’s staff of 14,000, and was made in part because of the “stiff competition with significantly larger” grocery chains.
“To remain competitive and provide our shoppers with the best assortment, lowest prices and the friendliest service, under the current economic challenges the company needs to prioritize where it makes its investments,” she wrote. “The termination of the above-market Health Reimbursement Arrangement program was a difficult decision and one that was not taken lightly.”
The Bee contacted more than 30 past and present employees of The Save Mart Companies. The specific benefit was available only to the company’s nonunion employees, including its executives, store managers, department supervisors and corporate employees. Union workers at the various Save Mart brands have contracts that grant separate retirement health benefits.
While some of the former employees losing the benefit were in upper management and earning executive salaries, others were corporate office workers from administrative assistants to human resources, billing clerks and more.
Staff stayed with chain because of promise
That includes Mark Johnson, a Modesto native who joined the The Save Mart Companies when it acquired the Food4Less brand, which it rebranded FoodMaxx, in 2002. His work took him to Chico for the company and he retired in 2020 as a produce manager. He was making $23.30 a hour when he ended his 20-year career.
All the while, he said management told them if they worked long enough for the company, they’d retire with a “forever” health care benefit.
“We stayed because we knew we’d be eligible for this benefit,” he said. “For the rest of my life, I lost that benefit they had promised we’d get if you stayed in management and didn’t go union. You think they’re going to take care of you, but they don’t. It’s really kind of devastating for me.”
Johnson has received $500 a month since he retired at age 60. He was counting on the monthly allotments to help cover his private insurance costs until he hit Medicare age. Now, at age 62, he’ll have to find a way to span the three-year gap until he is eligible. He is considering finding a job with benefits, but he’s unsure if at his age he’ll have much luck.
Save Mart’s long history of providing its nonunion employees with some form of health care coverage dates back to the 1980s, around the time Piccinini took over the company from family members and began a long and successful tenure as CEO. Piccinini’s father and uncle opened the first Save Mart grocery on Crows Landing Road in Modesto in 1952.
Long-standing benefit went to nonunion employees
In the company’s early days, longtime retirees said store managers and department supervisors were part of the union. But then those positions were taken out of the union, which happened to Modesto resident Steve Beaver, a 40-year Save Mart employee.
He began working for the company as a bag boy in 1970, when the company had about 20 stores. When he retired in 2010 as the vice president of Save Mart store operations, there were 245 stores. He vividly recalls the day his position was taken out of the union, when company management told them they’d always have the same health benefits as union employees.
“Receiving the letter triggered a lot of emotions including anger and disbelief. What a cruel, uncaring decision that has been made by people who do not have a clue about what (Save Mart) was all about,” he said.
Before about 2015, Save Mart had offered its long-term retirees the same health benefits as its existing employees, allowing them to buy the company-provided insurance plans if they kept paying the premiums.
After that, the company switched to the HRA arrangement.
In 2017, the company sent a letter to all of its eligible employees (who were at least age 55 with 30 years of service at the company) about changes to the HRA program that encouraged some of its longest-serving staff to retire. The company was going to cut off the spousal allotment at the start of 2018, but those who retired before the end of 2017 would receive up to $1,000 a month if they were under age 65 and up to $600 if they were over that age.
That convinced many to retire early, including Modesto resident Anthony Martinez, who stepped down at age 58 so he and his wife would both get the benefit. Since starting with Save Mart as a bagger in 1980, he worked his way up to store manager and retired from that position in Manteca. He recalls the “mass exodus” the 2017 offer incited and said if he’d known he’d lose the $1,000 a month just five years later, he might have stayed longer.
“We were some of the originals that built this company. It became a multimillion-dollar and now multibillion-dollar business with us because it seemed like we were a family,” Martinez said. “Bob Piccinini always said we need to take care of our store managers and we believed that and worked harder because of that.”
Save Mart decision leaves retirees scrambling
Martinez also took issue with the two-month window the new ownership gave retirees before cutting off their health care supplement. He said he’ll have to find a way to cover an extra $1,000 a month now.
Sonora resident Ed Popke retired in 2016 as vice president for operations for Save Mart Supermarkets and was a second-generation employee of the grocery chain. His mother had worked for the company for 23 years and he worked his way up through the ranks from the produce department. At age 62, he and his wife were receiving the full allotment, $1,000 a month.
He said the new ownership chose the most drastic step to reduce retiree costs, by giving them essentially a 60-day warning and then ending all benefits completely. “The way they framed the letter to employees, it’s ruthless,” he said. “They could have had so many different options. Give us to the end of the year. Maybe cut the (spousal) benefit. But they just shut the hammer down.”
The decision to end the HRA for retirees also leaves some fearing they’ll lose whatever money they’d been able to accumulate in their accounts as well. For Modesto resident Denny Wraske, that means he could lose the $28,000 he was able to save from his monthly HRA allotments.
Wraske started as a clerk in high school in 1971 and retired at age 64 after 47 years with the company. Because his wife was still working, they were able to save up their allotments and had planned to use them to allow her to retire next year. But now, with their monthly stipends ending and saved HRA money in question, she will need to postpone that for possibly years more, he said.
The letter from Save Mart announcing the retiree benefit elimination gave only numbers to contact Via Benefits, its third-party HRA administrator. But retirees said they have received conflicting information from customer service representatives about what will happen to the money in their accounts. Some have been told it will be forfeited, while others have said they have more time to spend it down.
“It’s just really unfortunate this wasn’t structured at the close of the deal,” Wraske said.
Some retirees now considering part-time jobs
Save Mart did not not reply to questions from The Bee about the money leftover in retiree HRA accounts but said as part of its written statement that the company had “provided resources to help with their health-care coverage considerations.”
But retirees aren’t the only Save Mart employees upset about the decision. Those close to or planning retirement are also upset that something they’ve been working toward for years is going away.
Modesto resident Donna McCullough, a performance management specialist in the corporate office, plans to end her 32-year career with Save Mart later this month. She started out in the union but has been in a nonunion position for 15 years, and said she’d always been told the health benefit was waiting for her at the end of her career.
At age 58, McCullough had planned to use the money to offset her insurance costs until she was able to get Medicare. Now, she still plans to retire but will have to look for another job with benefits until she reaches age 65.
“I could stay with Save Mart, but I’m not going to stay with Save Mart now,” she said. “A lot of us had been offered jobs at other companies but stayed because of this benefit. I’ve talked with other (people in the company close to retirement) and now they’re going to have to continue working.”
Save Mart spokeswoman Castro said the move was made to prioritize existing employees. The company finalized a new contract that was recently ratified with UFCW 8-Golden State, the union that covers some 8,000 staff working at the company’s stores.
“For over 70 years, The Save Mart Companies has focused on keeping prices low and prioritizing our current store team members who are serving our customers and communities day in and day out. Consistent with the company’s Executive Chairman Shane Sampson’s message that employees are our number one priority, we have invested in a record-setting contract for our union members,” she wrote in her statement. “We are focused on the company’s future, including our unwavering commitment and responsibility to active team members and shoppers.”
Still, retirees said the company’s statement has been cold comfort in light of their decades of service. Modesto resident Vickie Del Re, who worked at Save Mart since 1978 and retired after 35 years in 2013, knows from firsthand experience handling benefits for employees how much retirees rely on them.
“So many people dedicated their lives to Save Mart. We were touted as a family,” said the 65-year-old. “We gave up a lot of our own family time. We did a lot of extra stuff for Save Mart like the races and the relays. And they’re doing this to us now. It’s just so frustrating. That’s not how you treat family.”
This story was originally published May 10, 2022 at 10:06 AM with the headline "They helped build Save Mart in California. Now retirees feel betrayed by sudden benefit cut."
