Tesco bucks trend to offer DB plan to part-timers
UK – Supermarket chain Tesco is to offer a defined benefit (DB) pension plan to its part-time and temporary staff from April 6.
Nearly 200,000 employees, including full time staff not already in a pension scheme, will have the opportunity to join the new ‘Pension Builder’ scheme when it is launched next month.
Contributions will be set at four per cent of earnings with around double this amount put in by the company.
Staff over the age of 25 with 12 months’ service will automatically be entered into the scheme unless they choose to opt out.
Part-time staff will be able to join Pension Builder in autumn this year, while full-time staff will be applicable for membership from spring 2002.
Clare Chapman, Tesco human resources director, comments: “ Our staff tell us they want flexible work arrangements – and a pension that matches this lifestyle. We have designed Pension Builder around their needs.”
The scheme will work by calculating the pension earned by each employee based on their annual pay, including overtime, for each tax year.
Over a forty year career, Tesco says, staff will earn a guaranteed pension of 60% of average earnings, with protection provided against inflation for both serving members and retirees.
Graham Snell of consultant Watson Wyatt, advisors to the Tesco scheme, adds: “We were pleased to see Tesco buck the trend followed by those employers who have changed employee schemes recently. Most have chosen a lower cost money purchase scheme but Tesco did not see this as the best solution for their workforce, who will be far better served by this innovative alternative.”