Sainsbury's-Asda merger won't put pension funds at risk, claims chief executive
Mike Coupe says deal 'protects the long-term interests of around 90,000 Sainsbury's defined benefit pension scheme members'
Sainsbury's boss Mike Coupe has attempted to reassure MPs and company pension scheme members that a £12bn mega-merger with Asda would not put retirement funds at risk.
Mr Coupe said that the deal "strengthens the pension covenant" and "protects the long-term interests of around 90,000 Sainsbury's defined benefit pension scheme members".
"Let me take this opportunity to reassure you that our plans take full account of our obligations to our current and former colleagues.
"This is good news for our members."
That came in response to Labour MP Frank Field, chair of the work and pensions committee, who wrote to the Sainsbury’s chief executive on Monday expressing concerns over the merger’s impact on the two companies’ pension scheme members.
Mr Field asked if any specific provision had been made in the deal for the defined-benefit pension schemes and what risk-analysis had been done on the impact of the tie-up on the ability of the newly combined group to fund any pension shortfall.
Sainsbury’s’ schemes had a combined deficit of £974m in March 2017, a gap that more than doubled after the takeover of Argos in 2016. Asda’a had a shortfall of £408m the last time it was calculated in March 2016.
Mr Coupe said Sainsbury’s had notified the Pensions Regulator (TPR) of the deal and how it would impact pension scheme members. The regulator said on Tuesday that it was in “preliminary talks with all parties involved”.
Under the terms of the deal, Asda’s parent company Walmart would retain responsibility for its subsidiary’s defined benefit scheme.
In March the government dropped proposals to force companies carrying out takeovers to gain approval from TPR. The measures were designed to prevent pension scheme members losing out after transactions do not go to plan, as happened after the collapse of BHS in 2016.
Former owner Sir Phillip Green sold the high-street chain for £1 in 2015 but a year later 20,000 pension scheme members were moved into the Pension Protection Fund Scheme after BHS collapsed with a huge black hole in its retirement fund.
Sir Philip was later forced to pay £363m into the fund to help plug the gap.
Subscribe to Independent Premium to bookmark this article
Want to bookmark your favourite articles and stories to read or reference later? Start your Independent Premium subscription today.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies