UK - The pension scheme of supermarket chain J. Sainsbury plans to extend stakeholder as the only option to new executives joining the company.
The move will act as a driver for the company to give up its defined benefit provision. Since the launch of stakeholder all new employees below executive level have been offered the government’s new product instead of final salary provision.
The news has special resonance given that the company announced this week it is looking at the performance of 100 out of its 450 store managers and that job losses may result.
The new annoucement will potentially affect Sainsbury’s top 1000 employees. At the moment all executives are in Sainsbury’s final salary scheme to which the firm contributes 8.5%. This contribution rate is expected to increase over time to somewhere nearer the 12.5% company contribution rate the new stakeholder arrangement offers executives.
It is envisaged any employees transferred under TUPE will be offered entry to the final salary scheme if required.
The move has been prompted by a desire of management to show that the increasing switch from DB to DC provision affects all. The switch, over time, will reduce volatilty on the company’s balance sheet due to new accounting rule FRS17.
It is planned that the stakeholder offering will be improved gradually with the option to vary contributions and add various life and health covers. The basic stakeholder will also be used as an AVC vehicle for DB pension scheme members wanting to take advantage of concurrency.
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