The Co-operative Group’s (Co-op) overall pension scheme surplus declined by £458m year-on-year to £1,644m, as of 6 July 2019, according to its interim results report.

The report cited a fall in the interest rate used to value its pension liabilities from 3 per cent to 2.2 per cent as the primary driver behind the decline.

Co-op’s overall pension assets fell by £491m to £1,747m, although this was slightly offset by a decrease in liabilities, from £136m to £103m.

Co-op’s report stated: “It's important to remember that the accounting valuation of pension schemes is quite different to the valuation basis used by trustees. The trustees' valuation uses a more prudent basis which reflects the low risk assets that we are invested in.

“Nevertheless, we are well funded and in surplus on this basis, though the surplus is significantly lower than the £1.6bn shown in our accounts.”

The firm operates several defined benefit pension schemes, the largest of which is the Pace scheme, which has a £1,636m surplus, followed by the Somerfield Scheme, which is £11m in surplus. Its other schemes are in a total of £103m of deficit.

The Pace scheme was close to future accrual in October 2015, while the Somerfield scheme entered into a buy-in with Pensions Insurance Corporation in January 2019.

Co-op defined contribution pension scheme invested £290m in sustainable businesses and £50m in Scottish social housing.

In the report, Co-op chief executive, Steve Murrells, stated: "We've enjoyed another good six months where the strength of our business has led to a further £35m of value being generated for our members and their communities.

“Our food business continues to perform strongly in a highly competitive market and has now recorded 22 consecutive quarters of like-for-like sales growth. As our largest business, it is providing the fuel for our growth in terms of member value and community impact.”

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