What's the purpose of this document - Our Tesco

---

Tesco PLC Pension Scheme Tesco PLC Money Purchase Pension Scheme Tesco Retirement Savings Plan Policy for members applying for ill-health retirement

1

What is the background? Following the pensions consultation the Trustee and Tesco agreed that the Tesco PLC Pension Scheme would be closed to new and existing members from 21 November 2015. After closure the following ill-health benefits would apply to members deemed to be in ill-health:  Deferred members who still work for Tesco can apply for payment of unreduced pensions  Deferred members who no longer work for Tesco can apply for payment of their pension, reduced for early payment The definition of ill-health requires members to leave employment with Tesco. However, Tesco currently has up to c3,000 UK colleagues on long-term sick leave and the Occupational Health team cannot review all of these cases ahead of closure. Therefore a transitional, discretionary arrangement is required which is subject to Trustee and Tesco approval.

2

What is the proposed process for members of the Tesco PLC Pension Scheme?  Anyone off work on sick leave on 21 November 2015 will potentially be eligible for an ill-health award in line with the terms that would have applied, if they had been processed prior to that date – i.e. they may (if they’re ill-health is deemed to be serious enough) qualify for a “full” ill-health pension.  The Occupational Health and Pensions teams will have until 21 November 2016 to fully complete the ill-health process (complete all paperwork, terminate employment and receive their benefits). Any applications not completed by this date won’t be eligible for the terms for members who still work for Tesco.  This ties in with how the business supports colleagues off work on long-term sick over the first year off, with referral to the Occupational Health team occurring towards the end of that period. Colleagues will need to leave Tesco employment before they can apply for ill-health retirement.  Members will need to meet the conditions for ill-health on 21 November 2015 rather than when the application for ill-health retirement is processed. However, any challenging and unforeseen situations will be considered on a case by case basis for discretionary awards. Any applicants who return to work for more than one week will make themselves ineligible for a “full” ill-health award.  In addition, where members who qualify under the proposed policy for a “full” ill-health pension also meet the criteria for a serious ill-health lump sum (broadly, having life expectancy of less than one year), the terms for converting the pension into a one-off lump sum will be in line with those that were applicable to employed members in service immediately before the Scheme closed on 21 November 2015.  Members who don’t opt out of the Tesco Retirement Savings Plan will be entitled to a return of fund value on ill-health retirement but this should be fairly small (less than one year of contributions will have been paid). Therefore the ill-health pension paid from the Tesco PLC Pension Scheme will be paid in addition to the retirement savings from the Tesco PLC Money Purchase Pension Scheme.

3

What is the proposed process for members of the Tesco PLC Money Purchase Pension Scheme?  Deferred members can apply for early payment of their retirement savings increased by 5% pa until age 60 if a GP certifies they’re unable to do any job for the rest of their working lives.  As non-employed deferred members of the Tesco PLC Pension Scheme will not be entitled to any augmentation of benefits on ill-health (just their deferred pension reduced for early payment) any augmentations for non-employed deferred members of the Tesco PLC Money Purchase Pension Scheme should also cease from 21 November 2015 for fairness and consistency.  Augmentations for employed deferred members should continue.

4

What is the proposed process for members of the Tesco Retirement Savings Plan  Members taking ill-health retirement don’t present any direct cost to Tesco (the member just receives their retirement savings, there’s no augmentation of benefits) so the process doesn’t need to be as stringent and there is no involvement with the Occupational Health team.  Members make an application to the Plan’s provider (L&G) which is countersigned by a GP and then assessed by L&G. If a member is then deemed to be in ill-health the retirement savings are paid out to the member.  Tesco will not receive notification of this. However, it is illegal for members to falsely claim they are in ill-health.

5

How will we communicate this policy across the business  We are communicating the updated policy to People Managers in early 2016 and to members through a posting on the pension schemes websites.

November 2015