Tesco is increasing the retirement age of its employees to 67 from 65 to reducing a deficit of £275m in the company's pension scheme funds.
The new rule, which come into force in June, will affect 230,000 Tesco pensioners.
A Tesco spokesman said: "Because people are living much longer pensions cost much more to provide. These changes make our defined benefit scheme sustainable," reported Sky News.
The biggest retail chain employer in the UK, Tesco has evinced interest in moving from the higher retail price index to the lower consumer price index to slow the rate of pensions from 65 years, for the following two years going up to 67 years.
Tom McPhail, a pension expert at Hargreaves Lansdown, pointed out that a 30-year-old employee working at Tesco earning £26,000 a year will get £15800 instead of the £16,900, because of the switch from RPI to CPI, quoted the Telegraph. He said there is a possibility of the employees receiving 20 per cent lesser than what he/she could expect retiring at 65.
The increase in retirement age is not a mandatory rule for employees and they can choose to retire anytime after 55, reported the Recruiter UK.
The Telegraph noted that many other companies are in the process of introducing similar measures to get a control on expenses incurred at the time of payouts to employees retiring.