Tesco closes DB pension and introduces new flex package

Tesco

Tesco has confirmed plans to close its defined benefit (DB) pension scheme and to introduce a flexible benefits package for store workers to help the employer reduce annual costs of up to £250 million.

The supermarket announced in a trading statement to the London Stock Exchange yesterday that it is going to shut its DB scheme for all members of staff following a consultation period. 

The employer also outlined simplification plans for store management structures along with increased flexible working and an investment in payroll.

It will also close one of its head offices, based in Cheshunt in Hertfordshire, by 2016, with its two remaining head office locations to be consolidated into one to become Tesco’s UK headquarters in Welwyn Garden City.

Further measures to boost performance include the closure of 43 unprofitable stores around the UK and the introduction of a turnaround-based bonus for all employees.

Dave Lewis, chief executive at Tesco, said: “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 the situation.” 

Tesco, which reported a 2.9% decline in sales for the 19-week period to 3 January 2015, including the Christmas period, is under investigation by the Financial Conduct Authority (FCA) after it overstated half-year profits by £250 million. It has also faced falling sales in recent months.

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Former Halfords Group chief executive Matt Davies will be appointed as Tesco UK chief executive and join the supermarket on 1 June 2015.