Tesco PLC, Cheshunt, England, reported its group pension fund deficit increased 124.1% to £5.85 billion ($7.7 billion) over six months.
The supermarket chain operator on Wednesday said in its half-year report for the period ended Aug. 27 that the deficit had increased due to lower bond yields. For the year ended Aug. 27, the deficit grew 40.5%.
The company has a number of defined benefit plans and defined contribution plans. The U.K. pension deficit represents 96% of the group deficit, the report said. The principal fund within the group is the Tesco PLC Pension Scheme, London, which was frozen in November. In its place, a new DC plan, the Tesco Retirement Savings Plan, was opened to all Tesco employees in the U.K.
Tesco’s group pension fund assets totaled £10.3 billion as of Feb. 27, according to its annual report. Assets in the U.K. DB fund could not be learned by press time.
The company also has a £270 million per year contribution agreement in place with the trustee of the DB fund.
The half-year report added that the sharp decrease in corporate bond yields since the end of last year “has therefore driven a rise of more than 50% in the accounting valuation of our liabilities, increasing our reported accounting net deficit” to £5.9 billion. “Our defined benefit pension scheme assets have performed well and we are progressing with our derisking strategy, which aims to reduce risks from changes in interest rates and inflation,” the report said.