John Lewis moves from final salary pension to hybrid scheme
John Lewis has axed its final salary pension scheme and replaced it with a defined contribution hybrid scheme in which part of employeesÂ’ pensions will be linked to their final salary and part will be dependent on their contributions.
The retailer said the new scheme will take effect for new employees from April 2015 and for existing employees a year later.
With the changes first suggested a year ago, the partnership’s Council has now voted unanimously in favour of the final proposal.
The new scheme will continue to offer a non-contributory defined benefit scheme based on an employee's final salary, but at a reduced accrual rate of 1/120th for future service from April 2016.
The defined contribution part of the scheme, in which employee contributions are matched by the partnership up to 4.5% contractual basic pay, will be extended from three years to the full length of an employee’s service. Staff who are members of the Partnership Defined Benefit scheme will also receive 3% of their contractual basic pay each month on a non-contributory basis toward their defined contribution pension.
Meanwhile, the length of time an employee must wait before joining the defined benefit part of the scheme will be raised from three years to five years from April 2015.
Nat Wakely, director of the pensions benefit review, said: “The John Lewis Partnership pension is a defining element of our business and this decision will ensure that it remains so in a way that is fair and affordable.
“The Council's unanimous vote in favour of the final proposal was the culmination of a very thorough process, involving every area of the partnership and concluding in a decision that we took together in an open and democratic way.”
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