Sainsbury said the continuing decline in equity markets had resulted in a funding deficit.and that it is putting plans in place now to safeguard the security of benefits for members and to reduce the deficit and the pension fund liabilities.
The new arrangements will be introduced on 28 March 2004.and will include changes to the early retirement and death/ill health payments, and the introduction of a Career Average Scheme. Sainsbury had already closed its final salary scheme to new members and introduced a stakeholder plan.
Sainsbury’s chief executive Sir Peter Davis said: “These actions will go a long way to reduce our funding deficit and are in the best interests of both our colleagues and our shareholders. Sainsbury’s will increase its contribution so that it remains at double the rate of an individual who opts to stay in the final salary scheme.
“I am glad that we have been able to offer colleagues a choice of what to do in the light of their own circumstances. In addition we have given them six months to decide and it will be twelve months before any changes will take effect.
“These measures together with a reward policy which has moved towards greater emphasis on non-pensionable bonus and share scheme benefits will result in the funding deficit being significantly reduced. I believe these proposals are fair to both colleagues and shareholders.”