Marks & Spencer uses innovative funding approach as part of its plans to tackle pension deficit
As part of its pension deficit funding plan, Marks & Spencer today announced the provision to its pension scheme of a further interest in its existing property backed partnership to facilitate a contribution to the scheme of £300m. This follows the recent announcements by ITV and John Lewis which have used partnership structures to finance contributions to their pension schemes.
Feargus Mitchell, the Deloitte pensions partner advising M&S, said: “Utilising its existing partnership with the scheme has enabled M&S to once again find a proactive and innovative solution to the funding of its pension deficit in the interests of both the members and the company.”
Deloitte is finding that there is significant demand for this approach and is currently advising more than 10 major companies on solutions to fund over £2bn of UK corporate pension deficits. This represents a step-change in pension funding and enables companies to use balance sheet assets, such as property, brands and investments to achieve immediate reductions in pension deficits. The Deloitte approach provides the Trustee with a valuable economic interest whilst ensuring the underlying assets continue to be managed in an optimal way.
The pension crisis facing UK corporates continues and the current estimate of the combined FTSE 100 pension funding deficit is in excess of £100bn.2
Feargus Mitchell said: “This represents a significant step forward in the funding of pension schemes and enables corporates to unlock the value in their assets for the benefit of both their pension schemes and their wider corporate stakeholders.”
Notes for editors
The Deloitte approach involves the pension scheme acquiring a stake in a partnership backed by corporate assets, enabling the pension scheme to benefit from a secure source of income. The corporate can ensure the underlying assets continue to be managed in an optimal way and mitigate its risk of overfunding the scheme.
About Deloitte Total Reward and Benefits Limited
Deloitte Total Reward and Benefits Limited is a multi-disciplinary consulting group comprising 100 actuaries and other pensions and benefits specialists, which focuses on delivering high quality pensions advice to employers and scheme trustees. Deloitte Total Reward and Benefits Limited is authorised and regulated by the Financial Services Authority.
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms. Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu (‘DTT’), a Swiss Verein, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk\about for a detailed description of the legal structure of DTT and its member firms.
The information contained in this press release is correct at the time of going to press. For more information, please visit www.deloitte.co.uk.