J Sainsbury, the third biggest grocer in the UK, is injecting GBP350 million into its GBP582 million pension fund deficit and changing the scheme to reduce future liabilities.
The changes relate to the company pension scheme which was closed to new members in 2002. Members will have the option to either raise their contribution by 3%, or accept a reduced payout, the company said. Further controls on early retirement and the withdrawal of automatic migration to a higher scale of benefits on promotion will also be introduced.
Sainsbury’s will also increase annual deficit payments from GBP18 million to GBP38 million. The money will be raised from refinancing and will have a broadly neutral effect on underlying earnings, the supermarket chain said.
Justin King, chief executive of Sainsbury’s said, The injection of £350 million and the increased annual payments will fund the last reported deficit. In addition the increase in the members’ contributions together with the changes to future benefits will achieve a more appropriate and balanced sharing of cost and risk.