Sainsbury’s defined benefit pension scheme has recorded a surplus of £743m at the end of 2018/19, a £1bn swing on the previous year, its end of year results have revealed.

The retailer recorded a £261m deficit at the end of 2017/18, however a sharp uptick in actuarial gains in relation to changing demographic assumptions saw the groups DB scheme rocket into surplus on an IAS 19 accounting basis.

The £1.04bn shift was driven by experience gains of £644m and actuarial gains of £547m in relation to demographic assumptions, offset by a deferred income tax liability of £216m.

Sainsbury’s results stated: “The experience gains are as a result of updating the underlying membership data behind the actuarial calculations to that used for the September 2018 triennial valuation.

“The gain due to demographic assumptions reflects updating the mortality assumptions to the most recent available data as at the balance sheet date.”

Under its current recovery plans, agreed in the 2015 triennial valuation, the Sainsbury’s is contracted to contribute a total of £124m in 2019/20, including a £19m coupon from Sainsbury’s Property Scottish Partnership.

The group said had contributed £63m to the scheme in the 52 weeks to 9 March 2019. The 2018 triennial valuation is currently being agreed with the trustee.

In addition, Sainsbury’s said that guaranteed minimum pensions equalisation cost the group £98m, following the ruling last October.

“The £98m charge is non-cash and does not impact contractual pension contributions. In addition, £20 million was recognised in relation to pension scheme expenses and financing charges,” it said.

Last week, the Competition and Market Authority blocked Sainsbury’s planned merger with Asda over fears it would raise prices for consumers. The failed bid cost the supermarket £46m.

Despite this, underlying profits for the group are 7.8 per cent up, while net debt was £222m lower.

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