Tesco is to switch to the consumer prices index (CPI) to calculate its defined benefit (DB) pension scheme contribution rises, and increase the age at which a full pension is paid out by two years.
Until now, Tesco has used the retail prices index (RPI) to calculate contribution rises. It expects the change to offset the impact of inflation. It will, however, retain a 5% cap on inflation.
The changes, which will affect employees from 1 June, are the result of a review, which was undertaken to determine how the retailer’s DB pension scheme could continue to be sustainable.
The normal retirement age at Tesco will remain at 65, but as a result of the review, the full pension will not be paid out until age 67.
A spokesperson for Tesco 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 do not affect the pensions staff have already built up. They do not require employees to work for longer and their contributions will stay the same.”
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