AE reforms blamed for Morrisons cutting employer contributions

Pardon the Interruption

This article is just an example of the content available to mallowstreet members.

On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.

All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.

Supermarket chain Morrisons is proposing to reduce its pension contributions for hourly paid workers and increase employee contributions. Union Unite has said the extension of auto-enrolment has prompted the move and is seeking a mandate for action. 
Unite, representing 1,000 warehouse workers in Cheshire and Wakefield, has said it is organising briefings with members in the coming weeks to seek a mandate for action.  
Morrisons is planning to change its pension contribution structure from the current split of 5% from the employer and 3% from members, to an equal 4% contribution by each from March 2024. The supermarket chain then proposes to tip the balance in the other direction a year later, with 3% employer contributions and 5% employee contributions.  
Unite said senior managers and directors who are not hourly paid will not be affected by the changes and is demanding Morrisons withdraw its plans. 
According to the union, new legislation to extend auto-enrolment to under-22s and make contributions from the first pound earned has prompted Morrisons to propose lowering its contributions. The firm currently only makes contributions on salary above the lower earnings threshold of £6,240, which will be abolished. 
“Pensions villain Morrisons is planning to fleece workers by hiking their pension contributions while slashing its own contributions to the scheme,” said Unite general secretary Sharon Graham. 
National officer Adrian Jones added: “Morrisons is wrongly claiming it needs to make cuts due to the government changing the rules on pension contributions. This attack on workers’ deferred pay is all about increasing profits. Unite will stand by its members who choose to fight these attacks on pay and benefits.” 
For the first half of this year, Morrisons reported its underlying earnings before interest, taxes, depreciation and amortisation down by 10.7% to £394m. The company has a £700m three-year cost reduction programme and aims for £500m of working capital improvements over the medium term. 
A spokesperson for Morrisons said: “We have recently communicated to colleagues a proposal to make some changes to pension arrangements.” 
They added: “It’s important to note that the amount of money Morrisons is putting into colleague pensions will actually be going up when the auto-enrolment changes come in.” 
A formal consultation process will take place until early January 2024. 
The Department for Work and Pensions did not comment on the impact of auto-enrolment reforms.  
Do you expect other employers to reduce their contributions because of AE reforms? 

More from mallowstreet