BT 1998 Annual Report Download - page 77

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N O T E S T O TH E F I N A N C I A L S TAT E M E N T
30. United States Generally Accepted Accounting Principles (continued)
Pension costs
The following position for the main pension scheme is computed in accordance with US GAAP pension accounting rules under
SFAS No. 87 and SFAS No. 88, the effect of which is shown in the above reconciliation statements.
The pension cost determined under SFAS No. 87 requirements for the year ended 31 March 1998 was calculated by reference
to an expected long-term rate of return on scheme assets of 8.2% (1997 – 9.2%, 1996 – 9.6%). The components of the pension
cost for the main pension scheme comprised:
1998 1997 1996
£m £m £m
))))))))))!!!!)!!!111011111101111110111
Cost of benefits earned during the year 327 268 266
Interest cost on projected benefit obligation 1,554 1,645 1,543
Actual return on scheme assets (3,494) (2,038) (2,799)
Net amortisation and deferral 1,846 323 1,244
Additional cost of termination benefits 224 258 266
000000000011101!!!111011111101111110111
Pension cost for the year under US GAAP 457 456 520
000000000011101!!!111011111101111110111
The projected benefit obligation for the main pension scheme was determined using the following assumptions at 1 January 1997
and 1 January 1998:
1998 1997
per annum per annum
%%
)))))))))))))!!!!!!0051111
Discount rate 7.2 7.7
Rate of future pay increases 5.8 5.8
0000000000000111!!!5001111
The determination also took into account requirements in the scheme as to future pension increases.
The information required to be disclosed in accordance with SFAS No. 87 concerning the funded status of the main scheme at
31 March 1997 and 31 March 1998, based on the valuations at 1 January 1997 and 1 January 1998, respectively, is given below.
1998 1997
£m £m
)))))))))))))!!!1110051111
Actuarial present value of accumulated benefit obligation due
to past and present employees (all benefits vested) 21,299 18,823
000000000001051111!!!00011
Projected benefit obligation 23,513 20,733
Scheme assets at fair value 22,666 19,879
000000000001051111!!!00011
Projected benefit obligation in excess of scheme assets (847) (854)
Unrecognised net obligation at date of initial application of SFAS No. 87 (a) 262 314
Unrecognised prior service costs (b) 223 247
Other unrecognised net gains (2,199) (2,062)
000000000001051111!!!00011
Accrued pension cost under US GAAP (2,561) (2,355)
000000000001051111!!!00011
(a) The unrecognised net obligation at the date of initial application is being amortised over 15 years from 1 April 1988.
(b) Unrecognised prior service costs on scheme benefit improvements, are being amortised over periods of 15 or 16 years
commencing in the years of the introduction of the improvements.