Tesco, one of the world's largest retailers, says it will manage its own pension scheme - one of the largest final salary schemes in the UK - in order to maximise returns and become independent of consultants.

The Financial Services Authority has given the retailer permission to start up Tesco Pension Investment, which will be led by Steven Daniels, the former CIO of LV= Asset Management.

"We are building a high-calibre in-house team to help manage our growing scheme and reduce dependence on external providers," Lucy Neville-Rolfe, executive director of corporate and legal affairs at Tesco said today.

According to data held by Pension Funds Online, the supermarket group has one of the largest private sector pension schemes in the UK, with over 170,000 employees who are members of their defined benefit scheme, and investment assets worth over £6bn. Governance will continue to be provided by the trustees of the firm.

The firm is currently consulting on changes to its pension scheme which were announced in March and the current decision to manage its own scheme will have no effect on this.

Not long ago Tesco proposed changing the retirement age to 67 from 65 and also announced plans to switch the way it calculates inflation on its pension assets from the retail prices index (RPI) to the consumer prices index (CPI).

Tesco is currently recovering from a severe profit warning for 2012/13 and slashed expansion plans for its UK business last month. The supermarket chain is one of only four FTSE 100 companies who still offer final salary schemes to all their staff.

First published 08.05.2012

azeevalkink@wilmington.co.uk