Sainsbury’s has sold two properties with a fair value of £103m to a Scottish partnership set up to fund the J Sainsbury pension scheme.

On 17 June 2010 Sainsbury’s established the Sainsbury’s Property Scottish Partnership with the scheme. Under the arrangement, properties to a fair value of £256m were transferred to the Partnership.

On 25 March 2011, further properties to a fair value of £501m were transferred to the Partnership.

The scheme’s interest in the partnership entitles it to an annual distribution for 20 years to 2030 and the amount of this distribution is linked to the triennial actuarial valuation and will therefore vary once every three years.

The annual distribution in previous years has been around £35m and for 2014/15 it is expected to be in the region of £32m.

These contributions will be in addition to the group’s normal cash contributions paid to the scheme annually. The properties transferred to the Partnership will revert to Sainsbury’s ownership in 2030 in return for a cash payment equal to the amount of any remaining deficit on the scheme at that time, up to a maximum of £600m.

As at 15 March 2014, the post-tax pension deficit was £679m, up £95m higher year-in-year.

Following a consultation, Sainsbury’s announced the closure of its DB pension scheme to future accrual from 28 September 2013. The plan amendment generated a past service credit of £172m, offset by £14m of enhanced early retirement costs.

Additional transitional contributions of £10m were also made to active members’ DC plans across the second half of the year.

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