Tesco has announced plans for major changes to its pension scheme, including raising the age at which staff can retire on a full pension from 65 to 67.
The retailer blamed the spiralling costs it was facing due to longer life expectancies and the world economic crisis, which has slashed the value of the financial investments propping up the scheme.
The plans to change retirement benefits are due to apply as from 1 June, although Tesco stressed the proposals would not hit pensions that had already been built up before then.
“We are keeping one of the best pension schemes in the UK for our staff and making some essential changes to ensure it is sustainable for the future,” said a spokesman. “Importantly, the changes don’t affect the pensions staff have already built up, they don’t require colleagues to work for longer and their contributions will stay the same.”
Tesco’s pension scheme will stay as a defined benefit scheme, calculated based on the average earnings staff make during their careers, it said.
“The first change is that we’re proposing, for service after 1 June, to increase by two years the age at which a full pension is paid,” said the spokesman. “That doesn’t mean staff will have to work for longer - the normal retirement age remains at 65, and Tesco staff can still apply to retire any time after 55.”
Tesco claimed it would still offer one of the best pension schemes in the country although according to its last report and accounts, its pension scheme faced a deficit of £275m at the end of its financial year.
The second change to the scheme will see Tesco move as from June use the Consumer Price Index, rather than the Retail Price Index, to calculate the impact of inflation benefits, although it said it would keep the current yearly cap of 5%.