Tesco, Britain's largest private sector employer of 200,000 and also the country's biggest supermarket chain, is to raise its pension age from 65 to 67 in a move which could be followed by other major companies.
It also announced that it intends to move the inflation index it uses to calculate annual payment increases from the retail prices index (RPI) to the “cheaper” consumer prices index (CPI), which excludes mortgage payments, council tax and house price depreciation which could mean workers receive up to 20 per cent less upon retirement.
The moves underlined how companies are using any methods available to reduce the burden of paying workers in retirement.
Tom McPhail, a pensions expert at Hargreaves Lansdown “The cumulative effect adds up to a very significant cut in the employee’s total pension rights." McPhail calculated that a Tesco employee aged 30 and earning £26,000 a year would receive a pension of £15,800 a year rather than £16,900 when they retire at 65 because of the switch from RPI to CPI