Retailer Marks & Spencer is to close its UK defined benefit pension scheme for future service accrual, it has said in its 2015-16 annual results. The scheme has been closed to new members since 2002.
It intends to enrol defined benefit scheme members in its defined contribution savings plan from April 2017 and has started consultation on these proposals. The company said it did not expect these changes to have a significant impact on underlying costs in this year or next.
There would, however, be a non-underlying charge in the current financial year of between £100m-150m, largely driven by defined benefit pension changes "because when current active members become deferred members, the annual increase in their pensionable salary is linked to CPI as opposed to being capped at 1%", it stated.
The annual results showed that as of 2 April 2016, the IAS 19 net retirement benefit surplus was £824.1m, up from £449.0m in 2015.
Marks & Spencer said: "The increase is due to a fall in the present value of the UK defined benefit liabilities as a result of an increase in the discount rate from 3.1% to 3.4%. This reflects the movement in corporate bond yields in the year."
The triennial actuarial valuation of the UK defined benefit pension scheme showed that at 31 March 2015, it had a surplus of £204m, an improvement on the £290m deficit recorded in 2012.