Tesco has confirmed it will be cutting pension benefits for its executive directors to bring them in line with its wider workforce by the end of 2022.

The supermarket said that it’s chief financial officer, Alan Stewart, who received a cash allowance in lieu of pension of 25 per cent of base salary in 2019, will have his contributions cut to 7.5 per cent by the end of 2022.

Its financial report stated that the approach to moving to this position would be set out in next year’s remuneration policy.

Meanwhile, outgoing chief executive Dave Lewis’ base salary, maximum annual bonus and pension contribution rate for 2020/21, until his departure, will remain unchanged.

However, his replacement, Ken Murphy, has been given a pension contribution rate in line with the wider workforce at 7.5 per cent.

Executive pensions have faced close scrutiny since the introduction of new guidance by the Investment Association in September 2019.

The supermarket is the latest in a series of firms who have confirmed changes to executive remuneration to meet the updated guidance, including Thames Water, Rolls-Royce, and BT.

The group's remuneration committee confirmed that it will also be undertaking a review of the arrangements over the next year, ahead of its executive remuneration policy expiring at the 2021 Annual General Meeting (AGM).

Whilst this will take into consideration recent governance developments and emerging market practices, there will also be a “more fundamental” policy review in 2021/22, to allow Ken Murphy time in his new role and reflect his views.

Any policy proposals are then expected to be put before shareholders at the 2022 AGM.

The financial report has also confirmed details around the group's recent agreement with pension trustees, which will see the firm make a a one-off £2.5bn contribution to the pension scheme in the second half of 2020.

This, combined with a £0.3bn pension deficit contribution (DRC) in 2020/21, is expected to eliminate the funding deficit and significantly reduce the prospect of making further DRCs in the future.

Share Story: