BT 2014 Annual Report Download - page 72

69
The Strategic Report
Group performance
Group performance
Investments, cash and cash equivalents, loans and other borrowings
are reconciled to net debt of £7,028m in note 24 to the consolidated
nancial statements, on page 165. Movements in net debt are discussed
on page 65.
Provisions reduced by £97m to £533m, principally reecting our
expenditure against existing property and other provisions.
Deferred tax movements are shown in note 9 to the consolidated
nancial statements. Pensions, net of deferred tax, increased by
£1,098m to £5,641m and are discussed opposite.
The reduction in equity in the current year is principally due to the
recognition of actuarial losses on retirement benet obligations,
distributions to shareholders and the net buyback of own shares,
whichare greater than the prot for the year. The decit at 31 March
2014 does not impact the distributable reserves and dividend paying
capacity of the parent company, BT Group plc, which had a prot and
loss reserve of £9,693m at 31 March 2014.
Pensions
Overview
We provide retirement plans for employees. The largest of these plans
is the BT Pension Scheme (BTPS), a dened benet plan in the UK.
Although closed to new members, the BTPS still has around 41,000
active members, 195,500 pensioners and 76,500 deferred members.
The BT Retirement Saving Scheme (BTRSS) is the current arrangement
for UK employees who joined the group after 1 April 2001. It has around
26,000 active members.
The BTPS and BTRSS are not controlled by the Board. The BTPS is
managed by a separate and independent Trustee. Details of the
governance of the BTPS, its nancial position, performance of its
investments and a summary of member benets are available in the
BTPS Annual Report published by the Trustee in December 2013,
on the BTPS Trustee website (www.btpensions.net).
Details of the key risks associated with the BTPS and steps taken to
mitigate these are discussed under Our risks on page 52
The BTRSS is a contract-based, dened contribution arrangement
provided by Standard Life under which members choose their own
investments and receive benets at retirement that are linked to the
performance of those investments.
We maintain similar arrangements in most other countries with a focus
on these being appropriate for the local market and culture.
More information on our pension arrangements and on the funding
andaccounting valuations is given in note 19 to the consolidated
nancial statements.
BTPS funding valuation and future funding obligations
The funding of our main dened benet pension plan, the BTPS, is
subject to legal agreement between BT and the Trustee of the BTPS,
which is determined at the conclusion of each triennial valuation.
The most recent triennial funding valuation at 30 June 2011 and
theassociated decit contribution plan was agreed with the Trustee
inMay 2012.
At 30 June 2011, the market value of assets was £36.9bn and the
funding decit was £3.9bn. There are a wide range of assumptions
that could be adopted for measuring pension liabilities and legislation
requires that this decit is based on a cautious or prudent view  for
example, assuming a lower investment return than might be expected.
We also calculate a median estimate of the liabilities, using our central
estimate on future assumptions such as expected investment returns.
Ifthe valuation is performed using this approach the scheme had a
surplus of £2.5bn at 30 June 2011. At 31 March 2014, the surplus
using our median estimate assumptions was £0.5bn.
Under the current contribution plan, we made decit payments of
£2.0bn in March 2012 and £325m in March 2013 and March 2014.
The plan includes a further seven annual payments of £295m through
to March 2021 and will be reviewed at the next funding valuation due to
be carried out as at 30 June 2014.
Further details on the current funding agreement are included
in note 19 to the consolidated Ƭnancial statements and are also
discussed under Our risks on page 52