Financial health check.

The results of the valuation as at 31 March 2018 are provided below. The Trustee continues to work on the next valuation as at 31 March 2021 and will provide the results to members when they have been finalised.

  • Liabilities – the amount of money we need to have set aside to pay all future pensions when they fall due, based on a range of assumptions, including life expectancy and future investment returns.
  • Assets – the amount of money we have set aside in different types of investments.
  • Surplus – the value of the assets less the value of the liabilities, resulting in a positive amount.
  • Funding level – the outcome of the assessment shown as a percentage.
What do these results tell us?

As at 31 March 2018 the liabilities had increased to £9,890 million. Because the value of the assets increased by a larger amount in the same period to £10,542 million, there is an increased surplus of £652 million.

This is an improved funding position from the estimate shown in the last Summary Funding Statement as at 31 March 2017.

This outcome means the Scheme is currently in a healthy financial position and that our prudent investment strategy continues to protect and enhance the security of members’ pensions. But it’s important to be aware that a surplus doesn’t mean we have too much set aside. The value of the Scheme’s assets can go up or down over time and the assumptions used to work out the liabilities might change in the future too. Our responsibility is to make sure that we continue to have a sufficient amount in the Scheme’s assets long into the future.

How has the Scheme's financial health changed since 2015?

The continued improvement to the Scheme’s financial health is the result of a combination of factors that impact the calculation of the Scheme’s liabilities and the investment strategy being followed by the Trustee.

The key factors included:

  • Changes to assumptions about how long members will live, which indicated that the expected speed of future increases had slowed in recent years.
  • An investment strategy that protected the Scheme from increased liabilities resulting from falling interest rates and rising inflation over the period.
  • Strong performance of growth assets, which more than offset the impact of the Scheme closing in 2017.
  • Two contributions of £28 million paid by the Company in each of the two years following the 2015 valuation which had been previously agreed to continue to improve the financial security of the Scheme.
What happens next?

The Trustee will continue to target the aims of its long-term plan, gradually taking less risk with how it invests the Scheme’s assets across a careful mix of investments.

The next in-depth assessment is due to be calculated as at 31 March 2021. You can keep up to date on what happens in between with the annual Summary Funding Statement. This is posted in the news section of the site each year.

What would happen if M&S could no longer support the Scheme?

All pension schemes must give members an idea of what would happen in the unlikely event that the sponsoring employer is no longer able to support future funding.

At every actuarial valuation, the Scheme Actuary works out how much of the benefits that all members had built up would be covered by the value of the Scheme’s assets at that date. The Actuary must assume that the Trustee uses the amount it has set aside to buy members’ pensions from an insurance company. The insurance company would then take on the responsibility for paying pensions going forward.

As at 31 March 2018, the estimated cover for the benefits built up would have been around 77%. This is a lower percentage than the funding level because it costs more to buy pensions from an insurance company.

If M&S could no longer support the Scheme, it would be legally required to pay enough funds into the Scheme to secure the total amount of benefits earned with an insurance company. In the extreme situation that M&S could not pay this amount in full, the Pension Protection Fund (PPF) may be able to take over the Scheme and pay compensation to members. The compensation paid by the PPF would not be the same as the level of benefits from the Scheme. More information about the PPF is available at or by calling the helpline on 0330 123 2222.

Other information

The Trustee gets regular financial updates from M&S so that it can, with independent expert advice, keep a close eye on the financial health of the business. Whilst the retail industry is a challenging market, the size and cash flow of M&S give the Trustee confidence in the Company’s ability to support the pension scheme.

We must also confirm that:

  • There have not been any payments to M&S out of Scheme funds since the last Summary Funding Statement provided in 2017.
  • The Pensions Regulator has not had to intervene in the running of the Scheme.