Signing staff up to the new mandatory workplace pension scheme will cost Tesco €3.5 million next year, the supermarket chain has said.
Tesco said that more than 4,000 of its staff will be signed up to the Government’s My Future Fund under auto-enrolment.
From January, the company will pay 1.5 per cent of those workers’ gross wages into the new pension scheme. The workers themselves will pay the same amount – around €800 per person over the course of the year. The Government will chip in with €1 for every €3 invested by the workers.
Tesco already runs an in house occupational pension scheme for staff under which the retailer will match employee contributions up to 7.5 per cent of base salary. That plan is more generous if employees avail of maximum contributions from the company, especially those who are paying income tax at 40 per cent.
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Tesco said 4,500 of its 13,500 permanent staff are members of that in-house scheme, which allows workers to continue to work and contribute up to the age of 70 if they choose to do so.
The supermarket said its occupational scheme is open to all employees from the day they join the company, regardless of how many hours they work.
Up to 4,000 other staff will be covered by neither scheme, either because they have chosen not to sign up to the in-house fund or they do not meet the criteria to be compulsory enrolled in the new State scheme because they are younger than 23, older than 60 or earning less than €20,000 a year.
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It is open to members of this last group to ask the company to enrol them in My Future Fund voluntarily so that they have the benefit of some private pension coverage.
Separately, the retailer has announced plans for a 3 per cent rise in pay for all staff who are paid by the hour at its 188 stores across the State or work in distribution. That will bring the supermarket’s average hourly rate of pay to €18.13, it said.
Tesco said that auto-enrolment and the pay increase would cost them a total of more than €15 million in 2026.
Trade union Mandate said it was disappointed that Tesco had ignored the union’s request for it to engage in collective bargaining, choosing instead to announce a unilateral pay award.
[ What is the auto-enrolment pension scheme and what does it mean for you?Opens in new window ]
“Mandate had sought a pay increase in keeping with Ictu’s (Irish Congress of Trade Unions) private sector committee’s pay recommendation of between 4 per cent and 7 per cent for 2026 but Tesco’s pay award has fallen in real terms as our members have to contend with increased inflation, food inflation and a cost of living crisis, assistant general secretary Jim Fuery said.
He noted the Irish operation of Tesco was making profits of €185.3 million, equating to over a half a million-euro profit per day, up by a third of last year’s figures.
