John Lewis pension fund plunges by £2.8 BILLION
THE staff pension fund at John Lewis has lost almost £3billion as the troubled retailer lurches from one crisis to another.
News of the debacle comes after controversial plans by embattled boss Dame Sharon White to turn around the loss-making partnership sparked a furious backlash.
White is looking to raise as much as £2billion for the firm, which includes 34 John Lewis department stores and 332 Waitrose supermarkets. But it is feared that bringing in outside investment will mark the end of the firm’s much-vaunted employee ownership model, where staff share profits and have a say in how the business is run.
‘Queen of the High Street’ Mary Portas has accused White of ‘letting go of the soul’ of the business, describing John Lewis as ‘one of the most valued, loved and trusted brands this country has’. And former boss Andy Street said it would be a ‘tragedy’ if White’s plans went ahead.
Now The Mail on Sunday can reveal that the staff pension scheme has swung into a £69million deficit after a series of big bets on supposedly safe bonds – government IOUs – turned sour. The fund saw the value of its assets plunge last year by a whopping £2.8billion – or 39 per cent – having previously been in surplus to the tune of a healthy £474 million.
John Lewis blamed the huge hit on ‘extreme market volatility’ following former Chancellor Kwasi Kwarteng’s disastrous mini budget, ‘which created significant instability in the economy and financial markets’. A spokesman for the retailer said that the pension scheme remained ‘well funded’ and risks continued to be managed ‘carefully and appropriately’.
The scheme looks after the nest eggs of John Lewis’s 74,000 staff and past employees, paying a guaranteed pension based on earnings and service length, but was closed to new members in 2020.
Many company pension schemes saw the value of their assets slide last year, but the size of the slump at John Lewis is among the largest revealed so far, leaving the firm paying £10million a year into the fund to plug the gap.
Overall, John Lewis racked up losses of £234million last year and staff at its department stores and Waitrose supermarkets were not paid an annual bonus. But a spokeswoman for the retailer said its finances are ‘strong’, adding that the latest triennial valuation is expected to show a £120million surplus using a different accounting method, compared to a £58million shortfall in 2019.