Tesco’s net pension deficit has increased from £992 million to £1,406 million, according to its annual report.

The grocery retailer reported that the increase in its defined benefit (DB) pension scheme’s deficit is largely due to a reduction in bond yields and asset returns being lower than expected.

It made a one-off cash contribution of £180 million after the year-end, in anticipation of the forthcoming outcome of the triennial actuarial valuation, which the organisation said would be finalised by June 2012.

Tesco announced in March it is to switch to the consumer prices index (CPI) to calculate its DB pension scheme contribution rises, and will increase the age at which a full pension is paid out by two years.

Read also Tesco switches to CPI to calculate DB rises and increases pension age to 67

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