John Lewis bonuses cut as pension scheme deficit bites

PLUGGING John Lewis’ pensions deficit will see its staff receive a bonus lower than last year.

John Lewis’ permanent staff, or ‘partners’, are expected to pick up a 14% to 15% bonus, compared to 17% last year, according to reports.

The partnership revealed in January that it is restructuring its pensions strategy by introducing a hybrid scheme with an extended defined contribution element. John Lewis made a one-off £85m payment into its scheme at the time, and outlined a ten-year plan to fill its £840m hole.

Other changes would see the scheme’s normal retirement age linked to future increases in the state pension age, while pension increases in retirement would be linked to the consumer prices index (CPI) capped at 2.5% instead of the retail prices index (RPI).

The proposals also include ending its final salary pension scheme, with partners voting on changes later in the year.

Retail analyst Nick Bubb told The Guardian that partners “can’t have it both ways – a huge bonus and a generous pension”.

John Lewis, which incorporates the self-named department stores and Waitrose grocers, saw strong performance across its markets in 2013, with profits expected to have climbed to £370m from £340m a year earlier.

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