John Lewis pension assets plunge £2.8bn

John Lewis Partnership saw the market value of its pension assets plunge by £2.8bn last year amid a set of poor financial results. 

As revealed in its recent annual results, the value of the fund fell from £7.23bn to £4.42bn, largely due to a fall in the value of liability-driven investments “designed to hedge interest rate and inflation risks”.

The group said that following “positive progress” over most of 2022, the pension scheme was hit by extreme market volatility in September and October following the government’s mini budget and the consequent economic instability. 

In order to preserve suitable liquidity within the trust’s assets, the hedge was reduced from 100% to 75% of assets. However, the group said the trustee is working to increase this back towards the 100% target and “expects to be back to this level of hedging within the next few months”. 

In its results, the group said: “The trustee continues to manage scheme risks carefully and appropriately and the pension scheme remains liquid and well funded despite the earlier market volatility.” 

Last month, the group revealed its full-year losses plummeted to £234m, down from a loss of £27m the prior year, with the group axing its staff bonus for a second time and warning of future job losses. 

It comes as the impact of inflation was “felt across the business”, adding an extra £179m to its costs over the year. One of the biggest exceptional costs in the period was a write down in the value of Waitrose stores across its estate. 

The group said that shoppers had “felt the pain of inflation” over the period, with sales dipping by 2% to £12.25bn, as strong sales at John Lewis were offset by a decline of 3% at Waitrose.

While customers grew by 800,000 to 20 million, they bought less over the year, and the online boost seen during the pandemic was partly reversed, with shoppers shifting some of their grocery spend to discount retailers.