The total accounting deficit of the John Lewis pension scheme has increased by £28.6m in the six months to 29 July 2017, its interim results have revealed.

As at 29 July 2017, the accounting deficit was £1,042.3m, compared to £1013.7m, a 2.8 per cent increase. Net of deferred tax, the deficit was £881.3m, an increase of £23.8m. Pension fund assets increased by £237.4m (4.7 per cent) to £5,282.7m, while the accounting valuation of pension fund liabilities increased by £266.0m (4.4 per cent) to £6,325m.

Following the scheme’s triennial valuation, at 31 March 2016, the partnership agreed an ongoing contribution rate of 10.4 per cent of members' gross taxable pay, down from 16.4 per cent.

As a result, in the first half of the year, it made deficit reduction contributions of £83.7m, and total cash contributions to the pension scheme totalled £138.9m, a decrease of £0.4m or 0.3 per cent on the previous year. At 29 July 2017, the estimated actuarial pension deficit has reduced to £290m from £479m at 31 march 2016.

Furthermore, the interim report revealed pension operating costs were £107.5m, an increase of £11.1m on the prior year costs, reflecting the substantial decline in the real discount rate used to determine the cost to -0.50 per cent at the beginning of the year from 0.70 per cent at the beginning of the previous year, partly offset by the impact of our move to a hybrid DB and DC pension scheme in April last year.

Pension finance costs were £12.9m, a decrease of £1.9m or 12.8 per cent on the prior year, reflecting a reduction in the nominal discount rate used to determine the finance cost at the beginning of the year from the beginning of the previous year. As a result, total pension costs were £120.4m, an increase of £9.2m or 8.3 per cent on the prior year. “We expect that our full year total pension costs will be approximately £25m higher than the previous year,” the report said.

Commenting generally on its results, John Lewis Partnership chairman Sir Charlie Mayfield said: “Gross sales were up 2.3 per cent in both Waitrose and John Lewis; a solid performance in a difficult market. Our Partnership profit before tax and exceptional items was down 4.6 per cent, but this was flattered by property profits and after excluding these it was down 17.2 per cent.

“As we anticipated in our full year results statement in March, the first half of this year has seen inflationary pressures driven by exchange rates and political uncertainty. These have dampened customer demand, especially in categories connected to the housing market. Against that backdrop, our market share(6) gains in Fashion stood out. The exchange rate driven increase in cost prices has also put pressure on margin. We have chosen to hold back on increasing prices across many areas.”

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