The Pensions Regulator is discussing the potential impact of a tie up between Sainsbury’s and Asda on the companies’ pension schemes, it has confirmed.
“Active discussions” are now underway, with early-stage talks held “with all parties involved in the merger”, the regulator tells the Financial Times.
TPR says it would like “any business planning a major corporate transaction to identify if there is potential material detriment to a pension scheme and explain how they will mitigate against that detriment”, before approaching the regulator to make sure it will not use its anti-avoidance powers.
Sainsbury’s’ defined benefit pension schemes had a deficit of around £974m as at last March.
The Financial Times also reports that work and pensions select committee chairman Frank Field wrote to Sainsbury’s chief executive Mike Coupe to urge him to go to TPR before signing a merger.
Asda is owned by conglomerate Walmart. It is currently assumed that Walmart will take on the responsibility for existing Asda DB schemes, but Field queried what would become of DB schemes on the Sainsbury’s side.
While companies currently have no legal obligation to seek approval from TPR before merging, Field called on Sainsbury’s to go to TPR, as well as the Competition and Markets Authority and the Prudential Regulation Authority for prior clearance.