John Lewis Partnership, which consists of retailers John Lewis and Waitrose, will close the defined benefit (DB) section of its occupational pension scheme, instead providing an improved defined contribution (DC) scheme for its 83,900 employees.
The employee-owned organisation currently provides staff with a hybrid pension scheme, which combines elements of both DB and DC arrangements, depending on an individual’s length of service.
Once the DB section of the pension has closed, staff will instead have access to a DC-only scheme; this will offer matching pension contributions of up to 8% of employees’ pay, as well as an additional 4% contribution after three years of service, regardless of whether employees pay into the scheme or not.
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John Lewis Partnership approved the changes to its pension scheme on Wednesday 15 May 2019, following a year-long review and consultation with staff; more than 10,000 employees gave feedback on the proposals in the last six months, and the changes were further agreed by the John Lewis Partnership Council, a body of 58 democratically elected representatives who speak on behalf of staff.
The changes, which are due to come into effect from April 2020, have been designed to make the pension scheme structure more affordable; this supports John Lewis Partnership’s goal of improving its long-term financial sustainability.
The organisation predicts that closing the DB section of the pension will save approximately £80 million in annual pension costs and will more equally distribute profits among staff.