Marks & Spencer is to inject £500m into its final salary pension fund through a property partnership scheme and is to keep the scheme open to existing members.
The British retailer said the triennial actuarial valuation of its defined benefit pension scheme showed a deficit of £704m at March 31 2006.
Under pressure from new regulations, British companies are taking steps to reduce their pension deficits and many of them are closing costly final salary pension schemes to existing members, as well as new members. Marks & Spencer closed its final salary scheme to new members in 2002, a spokeswoman said.
The firm said it would establish a partnership with the pension scheme which will hold M&S properties with a current market value of approximately £1.1 billion.
These properties will be leased back to M&S and the partnership will make a fixed annual distribution to the pension scheme of about £50m for a 15-year period.
The pension scheme will hold the £500m partnership interest - representing the net present value of these future distributions - as part of its total investment portfolio, thereby reducing the pension deficit by this amount.