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Marks and Spencer Group plc Annual report and financial statements 2011
90
Notes to the financial statements continued
11 Retirement benefits continued
In 2007/08 the Group agreed to pre-fund £200.0m of its annual contributions to the UK Defined Benefit Pension Scheme.
The prepayment is in respect of annual contributions to the UK scheme at the rate of 17.9% of pensionable salaries. The remaining
£19.0m of the prepayment will be utilised during the year ended 31 March 2012 to fund the annual contributions, as well as c.£16m of
cash. In addition to this, a further £35.0m of cash contributions was made in April 2011 per the funding plan agreed in May 2010.
G. Retirement benefit obligations
Changes in the present value of retirement benefit obligations are as follows:
2011
£m
2010
£m
Present value of obligation at start of year 5,315.1 4,129.2
Current service cost 59.0 56.3
Curtailment charge 1.0 1.0
One-off pension credit (see note 5) (10.7) –
Interest cost 285.5 270.6
Contributions from scheme members 0.2 –
Benefits paid (256.3) (257.0)
Actuarial (gain)/loss (161.9) 1,119.3
Exchange movement (2.3) (4.3)
Present value of obligation at end of year 5,229.6 5,315.1
Analysed as:
Present value of pension scheme liabilities 5,215.5 5,298.6
Unfunded pension plans 0.9 0.9
Post-retirement healthcare 13.2 15.6
Present value of obligation at end of year 5,229.6 5,315.1
H. Cumulative actuarial gains and losses recognised in equity
2011
£m
2010
£m
Loss at start of yea
r
(1,508.9) (1,257.3)
Net actuarial gains/
(
losses
)
recognised in the yea
r
286.0 (251.6)
Loss at end of year (1,222.9) (1,508.9)
I. History of experience gains and losses
2011
£m
2010
£m
2009
£m
2008
£m
2007
£m
Experience adjustments arising on scheme assets 124.1 867.7 (1,280.3) (422.6) (80.4)
Experience (losses)
/
gains arising on scheme liabilities (8.4) 36.2 81.2 (61.5) 18.8
Changes in assumptions underlying the present value of scheme liabilities 170.3 (1,155.5) 272.0 1,089.5 53.0
Actuarial gains/(losses) recognised in equity 286.0 (251.6) (927.1) 605.4 (8.6)
Fair value of scheme assets 5,398.1 4,948.6 3,977.0 5,045.5 5,227.5
Present value of scheme liabilities (5,215.5) (5,298.6) (4,112.4) (4,542.3) (5,487.0)
Pension scheme asset/(deficit) 182.6 (350.0) (135.4) 503.2 (259.5)
12 Marks & Spencer UK Pension Scheme interest in the Scottish Limited Partnership
Marks and Spencer plc is a general partner and the Marks & Spencer UK Pension Scheme is a limited partner of the Marks and
Spencer Scottish Limited Partnership. As such, the partnership is consolidated into the results of the Group.
The Marks and Spencer Scottish Limited Partnership holds £1.5bn of properties which have been leased back to Marks and Spencer
plc at market rates. The Group retains control over these properties, including the flexibility to substitute alternative properties.
The limited partnership interest (held by the Marks & Spencer UK Pension Scheme) entitles the Pension Scheme to receive an
annual distribution of £71.9m from the profits of the Partnership earned from rental income, discretionary at the instance of Marks
and Spencer plc. The discretionary right is exercisable if the Group does not pay a dividend or make any other form of return to
its shareholders.
This is an equity instrument, disclosed within other reserves. Since the Group has paid an interim dividend in relation to 2010/11,
the associated distribution of £71.9m is payable to the Pension Scheme and has been recognised as a liability (last year £71.9m),
and is reflected as reduction in other reserves. When such reserves are no longer sufficient, this distribution will be charged to
retained earnings. The future value of total discretionary scheduled payments is approximately £791m (last year £862m).
Under IAS 19, the partnership interest of the Pension Scheme in the Marks and Spencer Scottish Limited Partnership is included within
the UK pension scheme assets, valued at £656.0m (last year £631.7m). For further details see note 11. The market value of this non-
quoted financial asset is measured based on the expected cash flows and benchmark asset-backed credit spreads.