Tesco increase staff retirement age to 67

Tesco is the first company in Britain to announce that they are increasing the retirement age for their staff, moving it up to 67. It is expected that other businesses will soon follow suit. The change will affect over 170,000 employees who will now have to work two more years if they want to qualify to receive the maximum payout on their pensions.

Before increasing the pension age the company did consult with employees on the subject, and unlike other FTSE 100 firms are still allowing new members of the company to buy into the pension scheme. There are already 293,000 people that are included in the pension scheme out of which there are about 172,000 active workers. Over the next couple of years the company plans to add 20,000 more customer service jobs throughout the UK as it opens new stores and renovates older stores.

In order to estimate how much Tesco should add to their employee pensions, they will utilise the CPI inflation measure to see how much of a contribution needs to be made. At the moment, the retailer uses the RPI (retail prices index) that was set at 3.9% this past January compared to the CPI figure of 3.6% during the same month.

Increasing the retirement age will not force employees to remain working longer, but if they leave early they will not receive as much in their pension savings. Tesco plans to introduce the changes starting on June 1st, adding that they had to increase the retirement age due to changes in life expectancy.

A spokesman for the company stated that pensions are becoming more costly because people are living longer and they were forced to change the age so that the benefit scheme would stay sustainable in the future.