Yahoo Finance Boots chemists at war over ‘callous’ pension changes
A row has erupted at Boots as changes to the company’s generous pension scheme threaten to upend the retirement plans of thousands of pharmacists.
Those enrolled in the company’s £4.8bn final-salary scheme will be forced to wait an extra five years to claim their pension, after new managers changed rules which allowed for early retirement.
Workers received a letter from new administrators Legal & General about the Boots Pension Scheme in November 2023, which said that the early retirement benefit, which had been “discretionary” and at the decision of the trustee, would be scrapped.
It means those who still want to retire at 60 will not receive a full pension. Some members have said they face losing £18,000 on lump sum payments. Others have said they could be left £4,000 a year worse off in retirement.
Some 53,000 members are enrolled in the scheme.
It comes as parent company Walgreen Boots Alliance is seeking a multibillion-pound sale of the British high-street chemist.
Boots has failed to sell since 2022 when it was put on the market.
The offloading of the pension scheme – which closed to new members 10 years ago – to L&G takes retirement liabilities off Boot’s balance sheet, as its owners look to make it a more attractive proposition.
‘I was six months off retiring – and now I can’t’
Paul Ridley, who was due to retire at 60 this July, said he was going to have to delay his retirement by two to three years as a result of the change.
Mr Ridley said: “My situation is that my wife retired in September last year. For years I’ve been making sure that I get my quotes and making sure I understand where my position is.
“The impact on me is that I cannot retire. I will have to wait at least two or three years. I am six months off when I was expecting to take that full pension,” he said.
The former Boots employee, who left the company in 2002 after 13 years there, said: “It’s really callous, it’s tough.”
James Harris, 58, who worked for the chain for eight years until 2006, said that he was going to have to delay his retirement for the full five years, after he received advice to stay in the final salary scheme.
He said: “It feels like they’ve failed on their obligations, for whatever commercial reasons they’ve decided, probably to offload something they see as a burden.”
Janet Smith, 57, worked for Boots for 23 years and paid into the scheme for 21. She is now a self-employed calligrapher.
She was planning to take her pension from Boots at 60, but was told that it would now cost her the equivalent of £4,000 a year – and more than £20,000 if she took her lump sum payment.
She said: “It’s massive, and if you run that forward to 82, and look at the difference for every year, the overall impact is just over £200,000.”
Mrs Smith said that the note that came from the scheme in November did not include any calculations for how the change would impact retirees.
She added: “I haven’t decided yet how I am going to handle it. I am fortunate that it is not going to mean that I have to live in a cardboard box, but however you look at it, that’s money that would have been useful – and it has been taken away.”
‘This is a brand everyone trusts’
Shanti Flynn, who used to work for Boots as an HR director, said that Boots’ pension scheme had been a major draw for prospective employees of the chemist.
Mrs Flynn said: “One of the things that we would say to people is that: “We don’t necessarily offer the most competitive salaries, but we’ve got this really generous and attractive pension scheme.
“This is a brand that everyone trusts, and thinks, with the white coats and all of that, that they’re not going to screw you later.”
She said that she had planned to use her pension fund to pay her older daughters’ university fees, but that the penalty for taking the lump sum early would be £18,000.
She added: “I had a pension statement in 2001, a year before I left, which didn’t have 65 as a retirement option. It had a column, ‘Age 60’, with where my pension was and 59, when I could have taken my pension as well.”
A spokesman for the Pharmacists’ Defence Association (PDA), a union representing pharmacists, said they were helping members of the pension scheme complain and that they expected concerns to be escalated further.
John Ralfe, a pensions consultant who worked on the Boots Pension Fund until 2002, said there had never been a “right” to retire at 60 under the terms of the scheme.
Instead, requests to retire at 60 on a full pension would be granted at the discretion of the pension trustees, he added.
A spokesman for L&G said: “Changes to the discretionary benefits are a decision made by the trustee of the pension scheme, having consulted with Boots (the scheme sponsor) and after taking the relevant professional advice.”
A Boots spokesman said: “The Trustees firmly believe that this agreement is a positive transaction for members and all decisions were taken in the best interests of the overall membership.
“The agreement with Legal & General delivers the ‘Gold Standard’ level of security and protection for members’ benefits.”
Are you affected? Get in touch: money@telegraph.co.uk
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