Tesco raises pension age to 67

| March 14, 2012 | 0 Comments
Tesco raises pension age to 67

Supermarket retailer Tesco has increased its pension age by two years to 67 for the 170,000 employees who contribute to the company’s scheme.

Tesco employees will still be able to retire from the age of 55 at a reduced pension rate, but they will only receive a full pension if they work until 67.

The retailer has also decided to use the consumer prices index (CPI) to measure inflation, rather than the retail prices index (RPI).

The government recently linked public-sector pensions to the CPI rather than the RPI.

As the CPI rises more slowly than the RIP, the annual inflation-linked pension increase will cost less but could mean employees will be thousands of pounds worse off during their retirement.

However the cost savings Tesco will gain from the changes will allow it to keep its defined benefit scheme open when many companies have closed theirs.

Tesco said it believed it was one of only four FTSE 100 companies which still provide a defined benefit pension scheme for their employees.

The changes to Tesco’s pension scheme will take effect from June 1.

The latest official figures from the Office for National Statistics show that the average retirement age for both men and women has risen steadily over the past ten years.

The average retirement age for men reached 64.6 years in 2010, while the average retirement age for woman increased to 62.3 years.

The age at which men stop working is now in line with the state pension for the first time in 26 years.

Joanne Segars, chief executive of the National Association of Pension Funds, warned that many people may be unable to afford to retire when they wish because of inadequate savings and pensions.

“We need to get more people saving for their retirement, and to encourage them to start as early as possible.

The state pension is also in need of urgent reform and we need a much simpler and more generous system,” she said.

Tags: average retirement age, , defined benefit scheme, , ,

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