The pension fund deficit at Tesco PLC, Cheshunt, England, increased 7.7% to £4.2 billion ($6.5 billion) over the six months ended Aug. 29, said a financial update from the company.
The financial update said the increase was driven mainly by asset returns, which have been “impacted by volatile equity markets in recent months.”
In September, Tesco announced that it would freeze its £8.4 billion DB fund, and replace it with a defined contribution plan starting in November. The new plan will include a 7.5% employer match for contributions, which is an increase on the previous DC plan. It will also make an extra one-time contribution.
In April, Tesco announced a funding plan agreement with the trustees of its DB plan to plug the then £3.9 billion deficit. It agreed to pay cash contributions of £270 million per year to the pension fund.