THE JOHN LEWIS PARTNERSHIP defined benefit (DB) scheme’s total accounting deficit hit £1bn in January 2014, its latest results have shown.
The partnership said as of 25 January 2014, the accounting deficit had increased by £181.3m or 22.1% over the previous 12 months. Net of deferred tax, the deficit was £820.3m, after a slight decrease, on this basis, from £822.1m in March 2013, Financial Director’s sister publication Professional Pensions reports.
The accounting valuations of pension fund liabilities increased by £422.2m or 11% to £4.2bn, while fund assets increased by £240.9m (8.1%) to £3.2bn. This included a one-off employer contribution of £85m in January (PP Online, 30 January).
The partnership has agreed to increase the employer contribution rate to 16.4% of members’ pay, up from 12.2%, and has agreed a ten-year deficit recovery plan which entails annual deficit reduction contributions of £44m.
As part of a two-year review of the partnership’s pension arrangements, announced in 2013, John Lewis has proposed to cut its DB accrual rate and increase the time employees must wait to become eligible to join from three to five years.
It has suggested linking the scheme’s normal retirement age to future increases in the state pension age, and linking increases to pensions in payment to the consumer prices index (CPI), capped at 2.5%, instead of the retail prices index (RPI).
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