The Co-operative Group pension surplus decreased during 2019, from £1.984bn at the end of 2018 to £1.973bn, according to its financial report.

The report, however, emphasised that there was relatively little change in the surplus, having "remained at £2bn, in line with last year".

The group noted despite this minimal change, “significant movements” had seen a £0.9bn increase in liabilities, though this was offset by a corresponding £0.9bn increase in assets.

The report stated: “The liability increase largely reflected a change in the interest rate used to value pension liabilities which decreased from 3 per cent to 2 per cent.

“The change in assets largely reflects the fact the scheme largely invests in gilts and corporate bond assets which have moved in a similar way to our liabilities.

“It's important to remember that the accounting valuation of pension schemes is quite different to the statutory valuation bases which drives deficit funding contribution requirements.”

However, the group has completed three buy-ins in 2020 so far, with the financial impact for these transactions not accounted for in the 2019 year-end figures.

The group completed its first ever buy-in for £1bn in January with Aviva, as part of the trustee’s broader de-risking strategy.

The group has since also completed two buy-ins with the Pensions Insurance Corporation (PIC) for £1bn and £400m, in February and March.


Since June, the default investment strategy for the defined contribution (DC) section of the Co-op’s pension has been invested in companies that score highly for sustainability, with a specific focus on mitigating climate change.

The group stated that this change has seen approximately £320m of Co-op employees’ DC assets since switched to invest in a fund focused on environmental, social and corporate governance (ESG) performance.

Furthermore, the report confirmed that following a £50m investment in social housing, announced in 2018, affordable housing projects in East Lothian, Glasgow and Yorkshire have now been completed.

Commenting on the report, Co-op chief executive, Steve Murrells, said: "The Co-op made further financial progress through 2019, showing that co-operation is working.

"Co-operation is something that is central not just to our business model but to everything that we do and we are committed to continue to deliver against our vision of co-operating for a fairer world.

“That drives the business decisions we make, not profit alone and not shareholder value.

“The importance of that has never been so stark and we will continue to play our part for as long as we need to."

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