Regulator in talks with Sainsbury’s over merger; chief exec says pensions not at risk

The Pensions Regulator is in talks with Sainsbury’s over the impact to the group's defined benefit pension schemes, following its merger with Asda, it has been confirmed.

News of the talks emerged after Work and Pensions Committee chair, Frank Field, wrote to Sainsbury’s chief executive Mike Coupe on 30 April, with a list of questions asking what this means for the supermarket’s DB schemes.

In his response to Field, published yesterday, Coupe confirmed that Sainsbury’s was in close talks with TPR over the merger and said the deal “strengthens the pension covenant”.

Coupe wrote: “We are already working with the regulator and continue to do so.Let me take this opportunity to reassure you that our plans take full account of our current and former colleagues. This proposed combination of Sainsbury’s and Asda strengthens the pensions covenant, and thereby protects the long-term interest of around 90,000 Sainsbury’s defined benefit scheme members.”

On Monday, Sainsbury’s announced its full year results which showed that its DB pension deficit has reduced by £589m to £261m on an IAS 19 accounting basis.

According to Coupe, the scheme has a recovery agreement in place paying over £124m a year.

Coupe said: “We take our obligations to current and former colleagues very seriously … We brought a member of the pensions team onto the transaction team at an early stage, and we undertook a review of the impact on covenants with the support of our advisers.”

He added that covenant analysis did not include the expected £500m annual strategy, generated as part of the transaction, which would leave it further enhanced.

Coupe reiterated that the trustees were supportive of the deal.

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