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Tesco eyes DB scheme closure in cost-cutting drive

Tesco could close its defined benefit pension scheme to new members following a turbulent period for the supermarket giant.

According to The Telegraph, Tesco chief executive Dave Lewis is considering shutting the scheme – one of the few DB arrangements still open in the private sector – as part of efforts to boost the company’s balance sheet.

Tesco has been hit by falling sales in recent months and an accounting scandal last year that saw its half-year profits overstated by £250m. The supermarket is currently under investigation by the FCA.

Changes to the pension scheme could be announced as early as Thursday, when Lewis is expected to update the markets on plans to improve the company’s finances.

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  1. Another one bites the dust – and quite right too. These are open chequebook plans that have been made immeasurably worse by regulation and legislation.

    Apart from the very biggest and most solvent behemoth companies who would invest in a firm with a final salary pension? It puts employees before owners.

    Anyway isn’t high time these DB schemes in the Public Sector were also dismantled? All commercial enterprises with financial problems have ditched them. UK Plc. has financial problems – the path seems logical. Anyway if AE is sauce for the population as a whole why isn’t it sauce for the public sector? The argument about pay disparity has long since disappeared.

  2. When you put together the accrued income entitlement in these schemes, generally low employee contributions and the future liabilities for a longer living membership, then it is no surprise that sponsoring employers have reached the bottom of their pockets…no matter how big they are.

    Although not exclusive to Tesco, I am waiting to see how many people in closed DB schemes will start to look at transferring to DC arrangements so they can access the pension ‘freedoms’ arriving in April

  3. Can we see a chart showing the correlation between the decline in BD scheme employer contributions alongside the rise in Directors remuneration packages….

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