Tesco considers raise in pension age

The UK’s largest private sector employer told staff this morning that it will raise the age of retirement and slow the rate payments to retirees rise.

The retailer emphasised that the rise in retirement age does not mean that workers will have to work until age 67 and can still retire at 65. But their savings will be hit and will not get their full pension until age 67.

Tesco said the changes, due to be implemented in June following a review, reflect a rise in how long people life. The retailer said employees are now expected to live until age 90, as opposed to 77 when the scheme was implemented in 1973.

Around 60% of staff are in the grocer’s pension policy is unusual in that it is based on average pay over a career in Tesco rather than final salary.

A Tesco spokesman said: “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.

“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 faced a deficit of £275m at the end of its financial year according to its last accounts. It has 293,000 members of the scheme including 172,000 active workers.

The retailer said it is changing how it takes inflation into account when increasing staff pensions each year - moving to the Consumer Price Index for service from the Retail Price Index after June 1. It will keep its cap at 5% a year, higher than the industry average of 2.5%.

Tesco said staff can still apply to retire any time after age 55.

Last month, the retailer offered a placement with a guaranteed job to work experience members after a misplaced job advert sparked a row over Government’s work experience programmes.