Tesco pension deficit drops by £0.6bn over six months

Written by Natalie Tuck

Tesco’s defined benefit pension deficit decreased by £0.6bn in the six months to 26 August 2018, it has revealed.

The supermarket giant now has a deficit of £2.1bn on an IAS 19 basis, down from £2.7bn at 24 February 2018. It attributed the reduction to asset performance over the period in addition to continued deficit contributions.

In addition, Tesco said the Booker DB schemes are now part of the group and they had a combined deficit of £22m on acquisition. Tesco acquired Booker on 5 March 2018, taking on its three DB schemes. The Booker Pension Scheme, closed to future accrual, is the primary scheme, with two smaller closed schemes relating to retail partners Budgens and Londis.

The last Booker Pension Scheme triennial valuation showed a funding deficit of £41m at 31 March 2016, with agreed contributions of £5m per annum for six years from 1 April 2017. No contributions were required for the retail partner schemes.

Tesco operates a variety of post-employment benefit arrangements, covering both funded and unfunded DB schemes and funded defined contribution schemes.

The Tesco PLC Pension Scheme is the most significant of the schemes but is closed to future accrual. Alongside this, the group operates the Booker Pension Scheme, the Republic of Ireland DB pension scheme, and the funded DC pension scheme for employees in the UK.

Of these schemes, the UK defined benefit pension deficit represents 95 per cent of the group deficit (24 February 2018: 96 per cent, 26 August 2017: 96 per cent per cent).

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