The Marks and Spencer (M&S) pension surplus increased by £77m to £991.3m in the six months up to September 2019, following two buy-ins in April.

Its half-year report stated that the increased surplus was primarily driven by growth in hedging assets after a fall in long-term interest rates.

In April 2019, the M&S UK Pension Scheme purchased buy-in policies with two insurers for approximately £1.4bn which, together with the two policies purchased in 2018, hedged the longevity exposure for around two thirds of the pension liabilities.

Its report stated: “The buy-in policies cover specific pensioner liabilities and pass all risks to an insurer in exchange for a fixed premium payment, thus reducing the company's exposure to changes in longevity, interest rates, inflation and other factors.”

Between March and September 2019, the M&S pension assets increased by £1,140m to total £11,364m, while its liabilities increased by £1,063m to £10,364m.

Employer contributions during the same period fell from £42m to £39.2m.

The most recent triennial valuation of the M&S UK DB Pension Scheme, on 31 March 2018, resulted in a statutory surplus of £652m and the firm concluded that no further contributions will be required to fund past service.

The DB scheme's liabilities increased by £18m as a result of payments relating to GMP equalisation.

Proposals agreed in May 2016 has seen the company making transition payments to impacted employees in relation to the close of the DB scheme, totalling £25m between 2017 and 2020.

Commenting on the report, M&S chief executive, Steve Rowe, said: "Our transformation plan is now running at a pace and scale not seen before at Marks & Spencer.

“For the first time we are beginning to see the potential from the far reaching changes we are making.”

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