BT 2013 Annual Report Download - page 141
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Financial statements
139
Financial statements
19. Retirement benefit plans continued
The results of the two most recent triennial valuations which have been performed using the same methodology are shown below.
June December
2011 2008
valuation valuation
£bn £bn
BTPS liabilities (40.8) (40.2)
Market value of BTPS assets 36.9 31.2
Funding deficit (3.9) (9.0)
Percentage of accrued benefits covered by BTPS assets at valuation date 90.4% 77.6%
Percentage of accrued benefits on a solvency basis covered by the BTPS assets at the valuation date 66.0% 57.0%
The reduction of the funding deficit in the period from 31 December 2008 to 30 June 2011 reflects an increase in scheme assets due to deficit
contribution payments totalling £1.6bn and strong investment performance of 10.1% per year. The liabilities increased due to a lower discount rate
which was partly offset by the impact of the announcement in July 2010 by the Government that CPI, rather than RPI, will be used as the basis for
determining the rate of inflation for the statutory minimum rate of revaluation and indexation of occupational pension rights.
Key assumptions – funding valuation
These valuations were determined using the following prudent long-term assumptions.
Nominal rates (per year) Real rates (per year)a
June December June December
2011 2008 2011 2008
valuation valuation valuation valuation
%%%%
Discount rate
—pre-retirement liabilities 6.35 6.76 3.05 3.65
—post-retirement liabilities 4.90 5.21 1.65 2.15
Average long-term increase in RPI and future increases in wages and salaries 3.20 3.00 – –
Average long-term increase in CPI 2.20 n/a (1.0) n/a
aThe real rate is calculated relative to RPI inflation and is shown as a comparator.
The average life expectancy assumptions, after retirement at 60 years of age, are as follows.
June December
2011 2008
valuation valuation
Number of Number of
At date of valuation years years
Male in lower pay bracket 26.0 25.5
Male in higher pay bracket 27.8 27.7
Female 28.5 28.3
Average improvement for a member retiring at age 60 in 10 years’ time 1.2 1.1
Payments made to the BTPS
2013 2012
Year ended 31 March £m £m
Ordinary contributions 207 171
Deficit contributions 325 2,000
Total contributions in the year 532 2,171
The group expects to contribute approximately £535m to the BTPS in 2013/14, comprising ordinary contributions of approximately £210m and
deficit contributions of £325m. In 2012/13 ordinary contributions were higher compared with 2011/12 due to a deduction in 2011/12 to recover
overpayments made in an earlier year.