Woolworths raises pension age 5 years

The high street retailer Woolworths yesterday vowed to keep its final salary pension scheme but said it would raise the retirement age for new employees by five years to 65 years of age and would make changes to the terms for existing staff.

The high street retailer Woolworths yesterday vowed to keep its final salary pension scheme but said it would raise the retirement age for new employees by five years to 65 years of age and would make changes to the terms for existing staff.

The move, designed to ensure it can afford to keep the scheme, came as the company announced that sales, on a like-for-like basis, were flat in the first seven weeks of the second quarter.

Speaking at the company's Annual General Meeting, chairman Gerald Corbett said: "We are making good progress on improving the underlying operational performance of the business."

While the trading performance beat that of the first quarter - when sales fell by 0.6 per cent compared with last year - City analysts billed it as uninspiring. "Woolworths continues to deliver underwhelming revenue trends.

Though the business has come under control, management are struggling to restart revenue growth in the face of multiple competitive pressures," said analysts at Citigroup Smith Barney.

Woolworths, demerged from Kingfisher in 2001, also set out the revised terms of its final salary pension scheme for both new and existing staff. Faced with longer life expectancy, the company said the retirement age would need to rise to 65 from 60 for new staff, who would also have to complete one year's service before being allowed to join the scheme.

Chris Rogers, finance director, said it was important the changes were made "so that we will be able to afford it. It's a case of if you scratch my back, I'll scratch yours". As at the end of January, the scheme had a deficit of £94m calculated on an FRS17 basis.

For existing staff, the changes mean they will have to increase their own contributions to seven per cent of salary from five per cent to get the same pay-out at 60.