Sainsbury’s use property to fill pension hole

J Sainsbury is set to put property assets valued at £750m towards its pension scheme in an effort to fill a £1.2b hole in funding for retired workers.

The supermarket giant announced the plan after it was reported that pre-tax profits increased to £610m up 17.5% as of March 20 with sales that were up 4.3%.  Sales overall increased up to £21.4b, a 5.4% increase.

At the moment, the 127,000 employees of the company are sharing a bonus pool of £80m, which averages out to payouts of about £630 a piece.

Sainsbury plans to create the new package in order to control a rising pension’s deficit that as of March of 2009 had almost tripled since 2006.

The company believes that the annual income from the properties placed into the pension scheme will create annual cash that will decrease the deficit to £600m by 2030.  The remaining portion of the deficit will be funded by the company with payments rising from £11m to £49m.

Marks & Spencer also announced this week that they will solve their pension deficit with increased funding of £800m.  The retailer will need to pay out £36m towards their pension funding over the next three years, which will increase to £60m per year up until 2018, the remainder of which will then be filled by transferring assets which also includes a portion of their property assets in order to reduce the overall deficit of the popular retailer’s retirement pensions.