// John Lewis defends health of pension funds after value of pension assets plunge by £2.8bn
// The fall was driven largely by a drop in the value of liability-driven investments
The market value of John Lewis Partnership’s pension assets dropped by £2.8 billion last year after the retailer publishes “a tough set of results”.
The partnership, which also includes Waitrose, was forced to defend the health of its pension funds after its value fell from £7.23 billion to £4.42 billion, as revealed in the retailer’s annual results.
The fall was driven largely by a drop in the value of liability-driven investments designed to hedge interest rate and inflation risks, The Times reported.
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White said it had been “a tough set of results”, with underlying losses of £78 million, which meant the company’s partners received no bonus. The loss was £234 million after a writedown in the value of Waitrose.
She added that shoppers had “felt the pain of inflation”, with sales down 2% to £12.25 billion as strong takings at John Lewis were more than offset by a decline of 3% at Waitrose.
At the end of the year, the retailer swung from a pension surplus of £474 million to a deficit of £69 million, reflecting the gap between the market value of pension assets held by its defined-benefit scheme and the IAS 19 value of its pension liabilities.
Pension liabilities were £4.49 billion, down from £6.75 billion in January 2022.
John Lewis blamed the hit on its pension scheme on fallout from Kwasi Kwarteng’s mini-budget last September.
To preserve suitable liquidity within the trust’s assets, the interest rate and inflation hedge was cut from 100% to 75% of assets, although the trustee is now in the process of raising this back towards the 100% target within the next few months.
