UK - Marks & Spencer said that it would sell bonds worth £400m after an actuarial valuation revealed a £585m shortfall in its pension scheme.
The capital injection which is expected to boost funding levels to 94% from 82%, will to take place by the end of March 2004. “The injection will be funded, subject to market conditions, through a public bond issue. The issue will be made under the group's medium term note programme,” the company said in a statement.
Alison Reed (pictured), group finance director, Marks & Spencer, 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.
The company is also adopting accounting standard FRS17 for the year ending April 3, 2004.
The profit and loss account pre tax charge under FRS17 for the UK Scheme for this financial year is estimated to be £134m (last financial year £136m, as reported under SSAP24).
As a consequence of adopting FRS17, the previously reported FRS17 deficit of £1.2bn at March 29, 2003 will 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.
Canada Life has signed a £351m bulk annuity contract insuring the pensioner liabilities of 2,510 members and dependents in the AA UK Pension Scheme.
In this week's Pensions Buzz, we want to know if you believe there is ever a case for combining retirement savings products with other savings products, and if the PPF levy for sponsorless schemes is appropriate for DB consolidators.
The Insolvency Service has disqualified four directors of trustee firms from running companies for a total of 34 years following an investigation.