The John Lewis Partnership has announced a host of changes to its pension scheme as it looks to claw back an £840m pension deficit.
The Waitrose owner will remain one of the few large UK firms with a final salary pension scheme, but has cut the generosity of its terms and increased the waiting period before staff qualify for the defined benefit scheme.
Under plans first floated in January last year, the accrual rate under the final salary scheme has been cut in half to 1/120 from the previous rate of 1/60. The waiting period before joining the defined benefit scheme has also been increased from three to five years.
The changes will affect new staff from April 2015 and existing staff from April 2016.
John Lewis today said its partnership council had unanimously voted in favour of the proposals, first outlined in January last year.
As a result of the trimming of final salary benefits, the group has also made changes to its defined contribution scheme. The period in which it matches staff pension payments (up to a maximum of 4.5% of basic pay) will be increased from three years to the full length of service. Members of the defined benefit scheme also receive 3% of their pay on a non-contributory basis toward their defined contribution.
Nat Wakely, director of Pensions Benefit Review, said: “The John Lewis Partnership pension is a defining element of our business and this decision will ensure that it remains so in a way that is fair and affordable.
“The Council’s unanimous vote in favour of the final proposal was the culmination of a very thorough process, involving every area of the Partnership and concluding in a decision that we took together in an open and democratic way.”
Changes to the John Lewis pension scheme follow Tesco’s decision to close its own defined benefit pension schemes in January. Weekend media reports suggest that Morrisons also plans to close its two defined benefit pension schemes.
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