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M&S agrees to £800m pension scheme injection

RETAILER Marks & Spencer will pump £800m into its final salary pension after a review found the scheme was deeply in the red, it said yesterday.

The clothing and food group said the scheme, which has about 123,000 members, had a deficit of £1.3bn at 31 March 2009, although that is likely to have since been reduced due to the recovery in equity markets.

The funding plan, agreed with the scheme’s trustees, includes M&S making a cash contribution of £35m a year for the first three years, rising to £60m a year until 2018. This has a present day cash value of £376m, the firm said.

M&S will also grant the pension scheme a further interest in the property-backed partnership established between M&S and the scheme in 2007, worth about £300m. An additional £124m will be provided by transferring assets from existing US debt hedge contracts held by M&S, the firm 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,” finance director Ian Dyson said.