John Lewis Partnership plc annual report and accounts 2012

23 Derivative Financial instruments (continued)

The fair value of the derivative financial instruments held by the Partnership are classified as level 2 under the IFRS 7 fair value hierarchy as all significant inputs to the valuation model used are based on observable market data.

The fair values of the Partnership’s listed bonds and preference stock, which have been determined by reference to market price quotations, are shown below. For cash and other financial liabilities, book values approximate to fair value.

2012 (£m) | 2011 (£m)

Bonds 914.3 | 895.7
Preference stock 3.7 | 3.5

The principal pension scheme operated by the Partnership is a defined benefit scheme, providing benefits based on final pensionable pay. The assets of this scheme are held in a separate, trustee administered fund.

The fund was last valued by an independent professionally qualified actuary as at 31 March 2010 using the projected unit method, which resulted in a funding surplus of £83m. The market value of the assets of the fund as at 31 March 2010 was £2,341m. The actuarial valuation of these assets showed that they were sufficient to cover 104% of the benefits which had accrued to members.

The annual contribution rate applicable for the year to 31 March 2011 was 12.8% of gross taxable pay of members, together with an additional £8.1m per year in respect of the past- service deficit arising from the actuarial valuation at 31 March 2007. As a result of the March 2010 valuation, the actuaries recommended a normal future annual contribution rate of 12.2% of gross taxable pay of members from 1 April 2011 onwards. The next triennial actuarial valuation of the fund will take place as at 31 March 2013.

As explained in note 8, there is also a senior pension scheme which provides additional benefits to certain members of senior management. The actuaries recommended an annual contribution rate of £1.6m. In addition, deficit reduction contributions totalling £6.0m were made in January and February 2011 to discharge the deficit.

The ongoing contributions expected to be paid to the pension schemes during the year to 26 January 2013 amount to £111m.

Pension commitments have been calculated based on the most recent actuarial valuations, as at 31 March 2010, which have been updated by the actuaries to assess the assets and liabilities of the schemes as at 28 January 2012.

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