Tesco raises maximum pension age to 67

You may have heard about Tesco's 'Big Price Drop', well now its UK workers are facing a big pensions drop.

Britain's biggest retailer yesterday informed staff it was to increase the age at which they would qualify for their full pension entitlements.

Currently Tesco operates a scheme which calculates pension payments based on a career average salary up to the age of 65. This will be extended to 67 to reflect increasing life expectancy.

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Tesco is at pains to point out that it is still one of only four companies in the FTSE 100 which maintains a "defined benefits" pension scheme, guaranteeing workers a certain level of payout when they stop working.

However, the change that many staff will find makes the biggest difference is an alteration to the index used to calculate future rises in their pensions.

Currently the scheme is linked to the retail prices index (RPI) but Tesco will switch to using the consumer prices index (CPI), which is designed to rise more slowly.

A Tesco spokesman said: "because people are living much longer pensions cost much more to provide. These changes make our defined benefit scheme sustainable.

"Our staff can still retire at 65; indeed they can still retire any time after 55. These changes don't require colleagues to work any longer, do not require colleagues to pay more and will not affect the pension that staff have already built up."

Tesco shares had risen 0.7% by 09:13.

BS