Tesco softens pensions blow after flood of staff complaints

The company will still shut the scheme but has improved the contributions in the new scheme that will take its place

Tesco staff have faced a pay freeze and attempts to alter the pension scheme, but the company has made concessions (Tom Muir)

Tesco has been forced to offer concessions to furious staff after the supermarket’s plans to close its final-salary pension scheme triggered a deluge of complaints.

The company will still shut the scheme but has improved the contributions in the new scheme that will take its place. Tesco staff are swallowing a pay freeze this year, while rival Sainsbury’s recently announced a 4 per cent pay rise for its shop-floor staff.

Originally, Tesco bosses had hoped to pay just 5 per cent of staff salaries into the scheme, compared to 11 per cent previously. But following pressure, the company will match between 4 per cent and 7.5 per cent of salaries paid in by staff. During the 90-day consultation, which closed earlier this month, more than 60,000 visits were made to the Tesco pension website, 27,000 calls were made to its helpline and 3,000 comments were made by staff.

Letters with the final decision were sent to staff last week, with its personnel chief, Alison Horner, admitting: “Your clear preference is to keep the existing defined benefit pension scheme – and not to close it.”

The changes will also see Tesco increase the amount of life cover it offers staff from four to five times their salary. It is also offering a one-off payment to boost pensions.

Chief executive Dave Lewis made one of his first priorities since joining a year ago to cut the £3.9bn black hole in the company’s £8.4bn pension fund. It has already agreed to pay in £270m to fill some of the shortfall, part-funded by the sale of properties owned in the pension fund’s name.

When the original proposals were recommended in letters to staff back in April, workers were furious at the initial cuts. One told The Independent: “It’s doom and gloom in stores… I have worked for Tesco for 22 years and I can honestly say it’s the worst it has ever been. Dave Lewis seems to be dragging out every skeleton from the closet. He is making the right noises and the City likes it. People are returning to stores. But sadly it is the little people at ground level who are suffering.”

The Union of Shop, Distributive and Allied Workers was heavily involved in the consultations over the past five months and persuaded managers to improve the conditions. A spokeswoman for Tesco said: “While we have taken the difficult decision to close our existing scheme, we have acted on this feedback and significantly improved the original proposal.”