Pension Scheme Funding

Marks & Spencer Group PLC
01 March 2004


Issued: 1 March 2004

Marks & Spencer Announces its Intention to Inject £400m into the UK Defined
Benefit Pension Scheme

Marks & Spencer today announces that the actuarial valuation of the Marks &
Spencer UK Defined Benefit Pension Scheme at 31 March 2003 has been completed.
The actuarial valuation revealed a shortfall of £585m between the market value
of the assets of the UK Scheme (£2,612m) and the assessment of the liabilities
(£3,197m). This represents a funding level of 82%.

As a result of this valuation Marks & Spencer intends to make a capital
injection of £400 million into the Scheme by the end of March 2004, increasing
the funding level to 94%.

The injection will be funded, subject to market conditions, through a public
bond issue. The issue will be made under the Group's medium term note programme.

In addition, Marks & Spencer announces that it will be adopting accounting
standard FRS17 (Retirement Benefits) for the year ending 3 April 2004. The
profit and loss account pre tax charge under FRS17 for the UK Scheme for this
financial year is estimated to be £134m, (last financial year £136m, as reported
under SSAP24).

As a consequence of adopting FRS17, the previously reported FRS17 deficit of
£1.2bn (£0.9bn net of tax) at 29 March 2003 will now be reflected on the Group's
balance sheet by means of a prior year adjustment. At the end of January 2004,
the deficit had decreased to approximately £1bn before tax (£0.7bn net of tax).

Alison Reed, Group Finance Director, of Marks & Spencer, said:
'Marks & Spencer is committed to ensuring the Defined Benefit Pension Scheme is
adequately funded. By taking this action we are providing reassurance to the
Scheme members.'

'We believe that this is an opportune time to raise the funds, taking into
account current interest rates and demand in the corporate bond markets.'

Please see attached appendix for detailed analysis on the impact of the cash
injection and the adoption of FRS17.

For further information contact:

Investor Relations - Tony Quinlan 020 7268 4195 / Damian Evans 020 7268 1563
Press enquiries - 020 7268 1919, Nick Claydon / Catherine Bertwistle

Appendix

All figures reported below are in respect of the UK defined benefit scheme only.
The Group does operate other schemes but these are not material in relation to
the UK scheme or the Group as a whole.

Impact of adopting FRS17

Adopting FRS17 this year will result in a restatement of the comparative results
for the year ended 29 March 2003 as follows:-

UK Defined Benefit Pension            Year ended 29 March 2003
Scheme                            ---------------------------------

                               As reported under     As restated under
                                    SSAP24                FRS17
                                              £m                    £m
                                -----------------     -----------------

Operating cost                               136                   122
Interest credit                                -                   (27)
-----------------                -----------------     -----------------
Net cost before tax                          136                    95
Taxation                                     (41)                  (29)
-----------------                -----------------     -----------------
Net cost after tax                            95                    66
=================                =================     =================
           
The reduction in the net cost after tax from £95m to £66m results in an increase
of 1.3p per share to the previously reported earnings per share of 20.7p per
share.

For the year ending 3 April 2004, the estimated charge under FRS17 to be
included in our reported results, together with the comparable SSAP24 charge,
are as follows:-

UK Defined Benefit Pension               Year ending 3 April 2004
Scheme                               ---------------------------------

                                        SSAP24              FRS17
                                                 £m                 £m
                                    -----------------  -----------------

Operating cost                                  177                120
Interest cost                                     -                 14
-----------------                   -----------------  -----------------
Net cost before tax                             177                134
Taxation                                        (53)               (40)
-----------------                   -----------------  -----------------
Net cost after tax                              124                 94
=================                   =================  =================
                 
Adopting FRS 17 in the current year results in an estimated reduction in the net
cost after tax of £30m, an increase in earnings per share of approximately 1.3p
per share.

FRS17 assumptions

The FRS17 assumptions are determined at the beginning of each financial year.
The main assumptions used in arriving at the pension charge under FRS17 for the
year ended 29 March 2003 and the year ending 3 April 2004 are as follows:-

                                    FRS17 Assumptions
                       Year ended 29 March        Year ending 3 April
                             2003                       2004
                                          %                          %
Inflation                               2.5                        2.5
Pension increases                       2.5                        2.5
Salary increases                        4.0                        3.5
Expected return on
assets                                  7.3                        7.3
Discount rate                           5.9                        5.5



Impact for 2004/05

The FRS17 pension cost charge to EBIT for 2004/05 is estimated to be broadly
similar to 2003/04.

Interest under FRS17 is expected to be a credit, compared to the charge in 2003/
04 of £14m, driven by the injection of the £400m into the pension fund and the
influence of the equity and debt markets on the pension scheme assets and
liabilities.

The Group will incur an interest charge relating to the £400m Public Bond Issue.



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