Primark owner Associated British Foods reported a defined benefit pension scheme surplus of £126m for the year ending 16 September 2017.

In its annual results announcement, AB Foods highlighted that the group’s DB schemes were in surplus by £126m at the end of the financial year in comparison to a net deficit of £303m in 2016.

As the UK scheme accounts for 89 per cent of the group’s gross pension liabilities, AB Foods noted that the scheme saw a surplus of £233m in comparison to a deficit of £138m last year. The use of the latest scheme membership data in the group’s 2017 triennial valuation was a key driver of the year-on-year funding improvement, the report explained.

The valuation identified that there has been more exits from the scheme than expected over the last three years and higher investment returns in relation to the IAS19 assumptions.

Furthermore, the most recent triennial valuation of the UK scheme, which was undertaken as at 5 April 2017, revealed a surplus of £176m on a funding basis. This was agreed by the scheme trustees after the group’s year end and so a recovery plan agreement between the firm and the trustees was not required.

The report added that the charge for the group’s defined contribution schemes in the year ending 16 September, amounted to £79m, up from £74m in 2016. In contrast, the cash contribution made to the DB scheme fell from £38m in 2016 to £36m in 2017.

The report highlighted that non-current assets were at £7.6bn, £0.7bn higher than the previous year, and were driven by “higher capital expenditure than depreciation and an increase in employee benefits assets following the move of the UK defined benefit pension scheme into surplus”.

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