Marks and Spencer announces £800m plan to fill pension deficit

Marks and Spencer Group and its pension fund trustees have agreed a funding plan worth £800 million to make up some of the shortfall in the retailer’s UK defined benefit pension scheme.

The announcement of the funding plan follows the completion of the triennial actuarial valuation, which showed a deficit of £1.3 billion at 31 March 2009.

The £800 million will include cash contributions of £35 million a year for the next three years, increasing to £60 million a year until 2018.

M&S will also put £300 million of value in through granting the pension scheme a further interest in its property-backed partnership, and a further £124 million will come from the transfer of assets from existing US debt hedge contracts held by M&S.

The £500 million difference between the deficit and the funding plan is expected to come from investment returns on the pension scheme’s existing assets.

Ian Dyson, group finance and operations director, M&S, said: “We’ve agreed a comprehensive funding plan with the pension scheme trustees, which makes efficient use of our existing assets, providing the scheme with a substantial income to reduce the deficit, while ensuring our cash flow obligations are spread over a manageable timeframe.”

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