Pensions Regulator “in active discussions” with Sainsbury’s & Asda over merger

CMA Sainsbury's Asda

The Pensions Regulator has confirmed that it is in talks with Sainsbury’s over its proposed £12 billion merger with Asda.

Head of the work and pensions select committee Frank Field MP has called on Sainsbury’s chief executive Mike Coupe to seek approval from the regulator before moving forward with the deal.

Yesterday it said it was in preliminary talks with “all parties involved in the merger” to determine whether the deal could be detrimental to employees’ pensions schemes.

The regulator added: “They can then come to us for clearance to gain assurance that we will not use our anti-avoidance powers.”

Sainsbury’s current pensions deficit is understood stand at around £974 million, having more than doubled from £408 million a year earlier due to its acquisition of Home Retail Group.

Field has raised concerns over whether the new acquisition could pile on yet more debt on its already sizeable deficit, despite the fact that Asda’s owner Walmart would assume responsibility for Asda’s defined benefit pension schemes in the deal.

Last month the government scrapped proposals to force companies undertaking large takeovers to seek approval from the Pensions Regulator, which came about after the messy and damaging fallout from the collapse of BHS affecting 22,000 employees’ pensions.

“In addition to seeking regulatory approval from the Competition and Markets Authority and Prudential Regulation Authority and Financial Conduct Authority, will you also undertake to apply for clearance from the Pensions Regulator in respect of the deal?” Field said.

Although the regulator is seeking assurances, independent pensions consultant John Ralfe told the Financial Times that the merger could be positive for employees’ pensions.

“Asda pension scheme members are better off because they are supported by the whole of the Walmart group,” he said.

“Sainsbury’s pension scheme members are better off because they are supported by a bigger company.”

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