Sainsbury’s defined benefit pension scheme recorded a £168m net of tax surplus in its latest results, a £429m swing from its March 2018 deficit of £261m, according to its half-year report.

The improvement was driven by an increase in the discount rate, which led to a £1.3bn decrease in the group’s funded obligations over the year, recorded at £9.3bn as at 22 September 2018.

The scheme's asset values also dropped by £56m to £9.79bn over the same period.

In March, the group recorded a £589m reduction in its DB pension deficit to £261m on an IAS 19 accounting basis, ahead of its merger with Asda.

According to Sainsbury’s, it is committed to making annual contributions of £124m to the Sainsbury’s Pension Scheme.

The group merged the Home Retail Group Pension Scheme into the Sainsbury’s Pension Scheme, on a segregated basis. A triennial valuation for the merged scheme was completed as at 30 September 2018.

Furthermore, Sainsbury’s said it is currently assessing the effect that the High Court judgment on the Lloyd’s guaranteed minimum pensions case will have on their scheme.

“The extent to which the judgement will increase the liabilities of the Sainsbury's Pension Scheme and reduce the net accounting surplus of £266m as at 22 September 2018 is under consideration,” it said.

“Any adjustment necessary is expected to be recognised by the Group in the second half of the period ending 9 March 2019.”

In May, The Pensions Regulator said it was in talks with Sainsbury’s over the impact to the group's defined benefit pension schemes, following its merger with Asda.

The deal is subject to regulatory approval and agreement with the trustees of the Asda Group Pension Scheme, to allow it to remain with Walmart.

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