M&S makes £95m from pension cuts
UK - British retail group Marks & Spencer (M&S) has reported a £95m (€136.5m) exceptional pension credit in its interim results, as pension scheme members consent to slow down benefit increases.
From the beginning of last October, pensionable salaries of members in the £4.5bn defined benefit plan will now only increase in line with inflation.
This move created a £95m in past service credit for the company, reflecting the impact of adjusting their projected final pensionable salaries.
"Members have chosen the option to limit their future pensionable salary increases to inflation," M&S said in its half-year report for the 26 weeks to end-September 2007.
Other options would have been to introduce member contribution to the scheme or to slow down pension benefit build up.
This was part of a deal struck in March as an alternative to closing the final salary scheme to future accrual or increasing the retirement age.
"These measures made our final salary pension scheme more secure for the future and reduced the risk of the deficit growing again," a spokeswoman for M&S told IPE.
She added: "Under all options, members' current pension value was untouched. The changes only affected the way members' pensions built up in the future."
Part of the changes to the pension arrangement included a £1.1bn sale and leaseback deal for some of its property holdings - £500m of which was put into the pension fund. [see earlier IPE article: M&S property plug cuts deficit to £283m]
At the end of September, the pension fund was £127.4m in surplus compared to a £1.05bn deficit the year before.
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