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Tesco confirms DB pension scheme closure

Tesco has confirmed plans to close its defined benefit pension scheme and one of its head offices as part of wider measures to reduce annual costs by up to £250m.

The retailer announced in a trading statement to the London Stock Exchange that it will shut its company DB scheme for all employees following a consultation period. 

The supermarket will also combine its two head office locations into one, with its Cheshunt base to close by 2016. The company will then be headquartered in its UK and group centre based in Welwyn Garden City.

In a further cost-cutting exercise Tesco will not pay out a final dividend to shareholders for the financial year 2014/15.

Further measures to boost performance include the closure of 43 unprofitable stores around the UK, increasing working-hour flexibility and introducing a turnaround-based bonus for all employees.

Tesco is also planning to dispose of its broadband and DVD rental services.

Overall, the retailer says it is making cost reductions of around £250m a year at a one-off cost of £300m.

Former Halfords Group chief executive Matt Davies has also been appointed as Tesco UK chief executive and will join the company on 1 June.

Tesco reported a 2.9 per cent decline in sales for the 19 week period to 3 January 2015, including Q4 2014 and the Christmas period.

Group sales worldwide fell 2.7 per cent over the same period, compared with the second quarter.

The supermarket is under investigation by the FCA after it overstated half-year profits by £250m. It has also faced falling sales in recent months.

Tesco chief executive Dave Lewis says: “We have some very difficult changes to make. I am conscious that the consequences of these changes are significant for all stakeholders in our business but we are facing the reality of our situation.”


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