Pension review update
Pension review update
In March 2013 the John Lewis Partnership announced that it would be reviewing the pension scheme to ensure that it remains both fair to Partners and affordable over the long term. Since then there have been extensive briefings and discussions with Partners and a draft proposal has now been presented to the Partnership Council, the central democratic body of the Partnership, for its consideration.
The main elements of the draft proposal are to adopt a Defined Benefit/Defined Contribution hybrid scheme as follows:
- to continue to offer a Defined Benefit (DB) scheme but at a reduced accrual rate for future service
- to reinvest savings from changes to the DB portion of the scheme to extend the contributory Defined Contribution (DC) from the first three years to a Partner's entire career
- to increase the waiting period before joining the DB section of the scheme for new Partners from three years to five years
- for future service, to link the pension scheme's normal retirement age to future increases in the State Pension Age
- to limit pension increases in retirement to the CPI measure of inflation capped at 2.5 per cent instead of RPI, for future service.
This proposal will now be developed and discussed throughout the Partnership with a final proposal expected to be voted on by the Partnership Council towards the end of 2014, in tandem with a period of statutory consultation.
Nat Wakely, Director, Pensions Benefit Review and the author of the draft review commented:
'The John Lewis Partnership pension is a defining element of our business. We are determined that it should remain so while ensuring that the scheme is sustainable for the long term.
'The draft proposal maintains a non-contributory Defined Benefit pension but at a reduced accrual rate which then enables the contributory Defined Contribution pension to be extended throughout a Partner's whole career.
'Unlike in other companies, employees and shareholders are ultimately one and the same in the Partnership. It's for that reason that decisions on the pension benefit require the agreement of the Partnership Council, the Partnership Board and the Chairman. This ensures that Partners play a key role in determining how the Partnership continues to offer a pension that is affordable and fair.
'It's an important decision for current and future generations of Partners and one that our democratic structure enables us to take together.'
The John Lewis Partnership Plc has reached agreement with the Partnership's Pension Scheme Trustee on the terms of the triennial valuation. As at 31 March 2013 the valuation of the Company's defined benefit pension scheme showed a deficit of £840m.; This valuation is in line with the accounting deficit already announced in March 2013. The deficit has arisen in the scheme principally due to a reduction in the interest rates used to discount the scheme's liabilities.
The Partnership and the Trustees have agreed a 10 year plan to eliminate this deficit, which includes cash contributions of £44m a year and in addition a one off payment in January 2014 of £85m. The balance of the deficit is expected to be met by investment returns on the scheme's assets.
Notes to editors
The John Lewis Partnership - The John Lewis Partnership operates 40 John Lewis shops across the UK (30 department stores and 10 John Lewis at home), johnlewis.com, 303 Waitrose shops, waitrose.com and business to business contracts in the UK and abroad. The business has annual gross sales of over £9.5bn. It is the UK's largest example of worker co-ownership where all 85,500 staff are Partners in the business.
John Lewis - John Lewis, 'Retailer of the Year 2013'¹ , 'The Nation's Best Retailer'² and 'Best Retailer 2013'³, typically stocks more than 350,000 separate lines in its department stores. The website stocks over 250,000 products focused on the best of fashion, beauty, home and giftware and electrical items including online exclusives. johnlewis.com is consistently ranked one of the top online shopping destinations in the UK. (www.johnlewis.com). John Lewis Insurance offers a range of comprehensive insurance products - home, car, wedding and event, travel and pet insurance and life cover - delivering the usual values of expertise, trust and customer service expected from the John Lewis brand.
¹ Oracle Retail Week Awards 2013
² Verdict Consumer Satisfaction Awards 2013
³ Which? Awards 2013
You can follow John Lewis on the following social media channels:
Waitrose - Waitrose, Britain's favourite supermarket*, has 303 shops in the UK and Channel Islands and is consistently achieving sales growth significantly ahead of the market**. Its strong performance has been driven by the success of the essential Waitrose range, Brand Price Match, an unmatchable top tier of products and free delivery for online shopping, as well as a long term commitment to sourcing the UK's finest local and regional foods. Waitrose combines the convenience of a supermarket with the expertise and service of a specialist shop - dedicated to offering quality food that has been responsibly sourced combined with high standards of customer service.(www.waitrose.com)
* Which? Annual Supermarket Satisfaction Survey, Favourite Food & Grocery Retailer at Verdict's annual Consumer Satisfaction Awards; Favourite Supermarket at Good Housekeeping Awards
** Kantar Worldpanel
You can follow Waitrose on the following social media channels:
For further information please contact:
John Lewis Partnership
Director of Communications
Telephone: 020 7592 6292
Simon Rigby/Jos Bieneman
Telephone: 020 7638 9571