Pensions update

Sainsbury(J) PLC
28 February 2003

J Sainsbury plc Announces Pension Changes



Following a review of its pension arrangements, J Sainsbury plc is introducing
new pension plans and making changes to existing schemes as a result of the
continuing decline in equity markets.  The new arrangements will be introduced
on 28 March 2004.



The next triennial actuarial valuation of the company's pension schemes is on 29
March 2003 and results will be announced towards the end of this year.
Sainsbury's expects this valuation to reveal a funding deficit.  It is therefore
putting further plans in place now to safeguard the security of benefits for
members but at the same time reduce its deficit and the pension fund
liabilities.  The company has already taken a number of steps by closing its
final salary scheme to new members and introducing a stakeholder plan.
Additional voluntary employer contributions of £15m were made last year and will
be again this year.  In addition investment risk has been addressed through
changes in asset allocation.





The new arrangements are:



•         The introduction of a Career Average Scheme as an alternative to
higher contributions required for members staying in the current final salary
scheme. Contributions in the Career Average Scheme will be at the same level of
4.25% and contributions in the Final Salary Scheme will increase to 7.00%



  • Changes to the early retirement, and death/ill health payments are also
    being made to the company's current schemes which will reduce liabilities,
    whilst at the same time life cover for death in service is being increased.



  • Based on current information Sainsbury's estimates a funding rate of 14%
    (the last actuarial valuation of the final salary scheme at March 2000
    established the required company contribution at 8.5%) for its defined
    benefits schemes resulting in an increase in pensions contributions of
    around £15m for 2003/04.  The final rate will be set after the result of the
    March 2003 valuation is known.



Sir Peter Davis, Sainsbury's group chief executive, said,



'These actions will go a long way to reduce our funding deficit and are in the
best interests of both our colleagues and our shareholders.  Sainsbury's will
increase its contribution so that it remains at double the rate of an individual
who opts to stay in the final salary scheme.  Although in the past, both the
company and members of the schemes have benefited from surpluses, the Company
has never taken a pensions holiday.



'I am glad that we have been able to offer colleagues a choice of what to do in
the light of their own circumstances.  In addition we have given them six months
to decide and it will be twelve months before any changes will take effect.



'These measures together with a reward policy which has moved towards greater
emphasis on non-pensionable bonus and share scheme benefits will result in the
funding deficit being significantly reduced.  I believe these proposals are fair
to both colleagues and shareholders '





Contacts:

Lynda Ashton

Head of Investor Relations

Tel:      [phone]



Pip Wood

Head of Media

Tel:      [phone]


                      This information is provided by RNS
            The company news service from the London Stock Exchange