Marks and Spencer to reduce pension contribution as funding improves

Marks and Spencer PLC is reducing annual cash contributions to its defined benefit pension fund to £28 million ($36 million) from £60 million from the 2013-2014 fiscal year through 2016-2017, according to a company news release.

The agreement between the company and trustees of the £6.2 billion Marks and Spencer PLC Pension Scheme, London, resulted from the pension fund's reduced deficit — valued at £290 million as of March 31 compared to £1.3 billion three years earlier.

“The improvement reflects the additional contributions made to the pension scheme following the 2009 valuation together with strong investment growth and sound risk management,” according to the news release.

As of March 31, the end of Marks and Spencer's fiscal year, 28% of the pension fund's assets was invested in government bonds and 23% in corporate bonds. The portfolio had a 13% exposure to overseas equities and a 4% allocation to U.K. equities. About 17% of the pension fund is allocated to “cash and other” investments, 4% used to hedge interest and inflation rate exposures, and the remainder is held in a real estate sale leaseback vehicle that is co-owned by the pension fund, according to the company's 2011-2012 annual report.