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M&S plans pension fund bail-out

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image captionM&S's final salary pension scheme is heavily in the red

Marks and Spencer has announced plans to pump a total of £800m into its final salary pension scheme in an attempt to fill its growing funding gap.

The plan includes M&S making cash contributions to the scheme totalling about £376m over the next eight years, as well as other investments.

The scheme, which has more than 120,000 members, reported a deficit of £1.3bn in March this year.

It is hoped that rising equity markets will fund the rest of this deficit.

"We've agreed a comprehensive funding plan with the pension scheme trustees, which makes efficient use of our existing assets," said Ian Dyson, M&S's outgoing director of finance.

He said the plan would provide the pension fund with an income to close its deficit over a "manageable time-frame".

M&S will make payments of £35m a year for three years, followed by £60m a year until 2018.

A further £300m will be provided through giving the pension scheme a bigger share in a current property-backed investment partnership.

In addition, £124m will be made available by freeing up money currently invested in US dollar hedging contracts.