UK - Sainsbury's has been accused of "short-changing" scheme members by paying reduced employer contributions while the fund is in deficit.
The £2.1bn J. Sainsbury Pension & Death Benefits Scheme had a £248m surplus at its last actuarial valuation and the company reduced contributions.
But the scheme, which is heavily invested in equities, has seen its surplus evaporate following market movements, leaving it with an FRS17 deficit of £386m.
City analysts claim that with a deficit of that size, Sainsbury’s has “short-changed” its members by not paying the full 18% contribution rate. Instead, for 2001 to 2003 the firm will only pay in 8.5%.
One City analyst said: “As long as there appears to be bucket loads of surplus cash in the fund, people will not get terribly excited. Even if your assets don’t fall, your liabilities go up either because of interest rates or because you are one year further on.
“The company has short-changed its members because instead of there being something like £150m going in over three years, there’s only £45-£50m going in.”
Sainsbury’s pension manager Geof Pearson said: “The board is committed to ensuring the financial security of colleagues’ pensions benefits and firmly believes that funding decisions and contribution rates should be based on long-term actuarial valuations undertaken every three years.”
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