BT 2015 Annual Report Download - page 179

177
Overview
The Strategic Report
Purpose and strategy Delivering our strategy Group performance Governance Financial statements
Additional information
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Decrease
increase in
liability
£bn
Decrease
increase in
deficit
£bn
Decrease
increase in
service cost
£m
0.25 percentage point increase to:
– discount rate 1.9 1.2a10
 ination rate assuin   and salar increases all ove b 0. percentae points 1. 0.b 10
  ination rate assuin  and salar increases are unchaned 1.0 1.0 
 salar increases assuin  and  are unchaned 0. 0. 
Additional one year increase to life expectancy 1. 1.0 
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BTPS funding
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he triennial valuation is carried out for the rustee b a professionall ualified independent actuar. hepurpose of the valuation is to desin a
fundin plan to ensure that the chee has sucient funds available to eet future benefit paents. he latest fundin valuation was perfored
as at 0 une 01. he net fundin valuation will have an eective date of no later than 0 une 01.
The valuation methodology for funding purposes, which is based on prudent assumptions, is broadly as follows:
– assets are valued at market value at the valuation date; and
– liabilities are measured on an actuarial funding basis using the projected unit credit method and discounted to their present value.
The results of the two most recent triennial valuations are shown below.
June
2014
valuation
£bn
June
2011
valuation
£bn
BTPS liabilities . 0.
Market value of BTPS assets 40.2 36.9
undin deficit .0 .9
ercentae of accrued benefits covered b  assets at valuation date 85.2% 90.4%
ercentae of accrued benefits on a solvenc basis covered b the  assets at the valuation date 63.0% 66.0%
he fundin deficit increased to .0bn at 0 une 01. hile deficit contribution paents totallin .bn and investent returns of .
per year since the 2011 valuation contributed to higher assets at the 2014 valuation date, the low interest rate environment resulted in a higher
value bein placed on the chees liabilities which ore than oset the iproveents in the chees assets.
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These valuations were determined using the following prudent long-term assumptions.
oinal rates per ear eal rates per eara
June
2014
valuation
%
June
2011
valuation
%
June
2014
valuation
%
June
2011
valuation
%
Average single equivalent discount rate 4.5 5.2 1.0 2.0
Average long-term increase in RPI 3.5 3.2 – –
Average long-term increase in CPI 2.5 2.2 1.0 1.0
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n line with developin aret practice and reectin a ore sophisticated ethodolo the discount rate at 0 une 01 has been derived fro
prudent return epectations above a ield curve based on ilt and swap rates. he discount rate reects views of future returns at the valuation date.
This gives a prudent discount rate of 2.1% per year above the yield curve initially, trending down to 0.6% per year above the curve in the long-term.
he assuption is euivalent to usin a at discount rate of . per ear.