CD&R to leave DB schemes unchanged if £7bn Morrisons bid successful

Clayton, Dubilier & Rice (CD&R) has stated it intends for employer contributions to Morrisons’ UK defined benefit pension (DB) schemes to continue in line with current arrangements if its £7bn takeover bid is successful.

Market Bidco, which is a vehicle of private equity firm CD&R, also said it did not intend to re-open any of the UK pension schemes to new members or future accrual and added that it did not intend to make any change to the benefits provided by the UK pension schemes.

In addition to this, the company stated that it had met the trustees of the UK pension schemes and fully appreciates the importance of the UK pension schemes and their members and trustees as key stakeholders within Morrisons' business.

The supermarket giant’s UK DB pension schemes are comprised of the Morrisons 1967 Section of the Morrisons Retirement Saver Plan, the RSP Section of the Morrisons Retirement Saver Plan and the Safeway Pension Scheme.

The last full actuarial valuations of these schemes turned up funding surpluses on an individual basis and an aggregate surplus of approximately £682m for all the schemes combined.

A Safeway DB scheme based in Gibraltar, the Safeway Stores (Overseas) Limited Pension Scheme, would also escape changes.

Market Bidco said the scheme, which had a deficit of approximately £1.3m on 31 January 2021, would remain open to new members and future accrual, while employer contributions would also remain unchanged.

A statement from the company said: “Bidco confirms that, following the CD&R Offer becoming effective, the existing contractual and statutory employment rights, including existing pension rights of all Morrisons' management team and employees of Morrisons will be fully safeguarded.

“Bidco believes strongly in recognising the value of employees to everything that Morrisons does and is fully supportive of Morrisons' recent pay award of at least £10 an hour for all Morrisons colleagues in stores and manufacturing sites.

“Bidco does not intend to make any change to the benefits provided by the Morrisons Pension Schemes and looks forward to constructive engagement with the trustees of the Morrisons Pension Schemes in the future.”

Morrisons was subject to a rejected £5.5bn bid from CD&R in July, while a revised takeover bid from private equity consortium Fortress Investment Group made earlier this month stood at £6.7bn.

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