Buoyant Tesco's pension tonic

Fiona Walsh12 April 2012

SUPERMARKETS group Tesco has weighed into the great pensions debate, pledging its support for defined benefits schemes.

This is in stark contrast to the trend of recent months, during which several leading companies, including rival Sainsbury's, have closed their final salary schemes to new entrants.

Tesco's defined benefit scheme, which is based on earnings throughout an employee's career, is not as generous as a final salary scheme, but is more attractive than a defined contributions one.

'It's good news and very much against the trend,' said chief executive Sir Terry Leahy, who believes it will 'undoubtedly heighten our attractions as an employer'. Tesco plans 21,000 new jobs this year including 9,000 in Britain, where it will open another 75 stores.

Leahy said Tesco's scheme had 117,000 members but, with only 9,000 pensioners, was 'a very young' scheme. ' Pension contributions far outweigh pension payments and will continue to do so for many years,' he said. Some 59,000 employees on defined contributions schemes were switched by Tesco to a defined benefits scheme last year.

Tesco's pensions promise came as the group unveiled a sparkling 14.1% increase in group profits to £1.2bn for the year to 23 February. Sales were up 12.7% to £25.7bn, including £4bn from overseas.

The fast-expanding international side saw profits leap by 60.8%, to £119m and the group has become hypermarket leader in five countries - Thailand, Hungary, the Czech Republic, the Slovak Republic and the Republic of Ireland.

Leahy said: 'This year marks the arrival of Tesco as an international group with market-leading positions in five of our nine countries and 65,000 staff overseas. We are winning at home and abroad.' Sales in Britain rose by 9.1% or 6.2% like-for-like, including strong volume growth of 6.8% - the biggest increase in the past five years.

Recent reports have suggested that a revitalised Sainsbury's - due for a trading update this Friday - has been clawing back market share, but Leahy said today's figures firmly disproved those reports. 'We have taken customers from all our competitors, including Sainsbury's,' he said.

Non-food showed strong growth of 18% and the personal finance side produced profits of £40m, sharply ahead of the previous year's £6m.

Tesco.com now operates in four countries. The business is profitable, excluding start-up costs in the US, and sales were up by 50% to £356m. At home, more than 85,000 internet orders are placed per week.

The dividend total is raised by 12.4% to 5.6p.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in