MSN Money UK - May 13, 2010
High street chain Marks and Spencer has agreed a pension funding package worth £800 million in a bid to close the scheme's deficit, it has been announced.
The group's defined benefit scheme, which has 123,000 members, faced a £1.3 billion shortfall when its last valuation was carried out at the end of March last year.
In order to close this, M&S has agreed to pay in an additional £376 million between now and 2018.
It will contribute £35 million a year for the next three years, rising to £60 million for the remainder of the period, on top of the regular contributions it already makes.
The fund will also benefit from a further £300 million through an additional interest in property owned by M&S.
Under the partnership, an interest in property, including stores, is transferred to the pension scheme and then leased back by M&S, providing the pension with an annual income.
The partnership is already generating around £72 million a year for the scheme until 2022, while the latest transfer will contribute a further £36 million annually for 15 years from 2017.
The group will also transfer assets worth £124 million to the pension scheme from existing US dollar hedge contracts.
The £500 million difference between the current deficit and the additional contributions M&S plans to make should be made up by investment returns on the scheme's existing assets.
M&S said the funding plan should not have a "material impact" on the group's net assets or its income statement.
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