HIGH street retailer Marks & Spencer today announced plans to inject £400 million into its pension fund after revealing a £585m shortfall in the scheme.
The group said its UK defined benefit pension scheme had assets of £2.6 billion as of March 2003, but liabilities of £3.2bn, giving a funding level of 82 per cent.
By ploughing £400m into the pension scheme, M&S will increase the funding level to
94 per cent.
Subject to market conditions, the retail giant plans to fund the cash injection through a public bond issue.
Finance director Alison Reed said: "Marks & Spencer is committed to ensuring the defined benefit pension scheme is adequately funded. By taking this action we are providing reassurance to the scheme members.
"We believe that this is an opportune time to raise the funds, taking into account current interest rates and demand in the corporate bond markets."
M&S also said it will be adopting the FRS17 accounting rule for the current financial year.
The profit and loss account pre-tax charge under FRS17 for the group’s UK pension scheme for this financial year is estimated to be £134m, compared with a charge of £136m last financial year under the previous SSAP24 accounting regime.
Ms Reed said: "As a consequence of adopting FRS17, the previously reported FRS17 deficit of £1.2bn, or £900m net of tax at March 29, 2003 will now be reflected on the group’s balance sheet by means of a prior year adjustment. At the end of January 2004, the deficit had decreased to approximately £1bn before tax, or £700m net of tax."
In November the firm announced a pre-tax profit before exceptionals of £311.5m for the first six months of the financial year, up from £290.1m a year ago. Analysts had been looking for between £305m and £315m.
Overall group sales were up by three per cent to £3.8 billion.
The full article contains 348 words and appears in Edinburgh Evening News newspaper.
