John Lewis Partnership plc annual report and accounts 2013

Pension charge

 We continue to maintain an open non- contributory final salary defined pension scheme. A defined contribution scheme is also available to Partners during the three year qualifying period before joining the defined benefit scheme.

The accounting charge for pensions included within operating profit was £138.0m, an increase of £14.0m or 11.3% on the prior year reflecting the change in the financial assumptions and growth in scheme membership.

The total accounting pension deficit at 26 January 2013 was £822.1m, an increase of £184.0m (28.8%). Net of deferred tax the deficit was £652.4m. The accounting valuation of pension fund liabilities increased by £621.0m (19.6%) to £3,796.0m, while pension fund assets increased by £437.0m (17.2%) to £2,973.9m, including a £125m one-off cash contribution made by the Partnership in January 2013.

A formal actuarial valuation is carried out at least once every three years by an independent professionally qualified actuary and the next formal actuarial valuations will be as at 31 March 2013. Given that gilt yields are indicating lower returns in the future, we anticipate the actuarial funding position will have weakened. On the actuarial funding basis used in the last valuation in 2010, we estimate that our defined benefit final salary schemes would have ended the year with a surplus of approximately £280m.

The pension is one of the most important benefits offered to Partners, but also accounts for a significant investment in Partners made each year by the Partnership. During the next year the Partnership will be undertaking a review of the pension scheme to ensure that it can remain fair to Partners and sustainable from a business perspective. This review will allow the opportunity to consult extensively to make sure that any changes are right for both Partners and the longer term interests of the Partnership.

Pension charge (£m)

2009 2010 2011 2012 2013 

 138 123 98 99 124

Pension accounting deficit (£m) (IAS 19 basis)

2013

Liabilities £(3,796)m

Net deficit£(822)m 

Assets £2,974m

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