BT 2002 Annual Report Download - page 116

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31. Pension costs continued
FRS 17 ± Retirement bene®ts
The group continues to account for pensions in accordance with SSAP 24. FRS 17, the new UK accounting standard on
retirement bene®ts, is not mandatory for the group until the year ending 31 March 2004. The transitional disclosures
required by this standard on the group's pension liabilities and scheme assets at 31 March 2002 follows.
The ®nancial assumptions used to calculated the BTPS liabilities under FRS 17 are:
Rates
(per annum)
%
Average future increases in wages and salaries 4.0
Average increase in pensions in payment and deferred pensions 2.5
Rate used to discount scheme liabilities 6.0
In¯ation ± average increase in retail price index 2.5
The expected rate of return and fair values of the assets of the BTPS at 31 March 2002 were:
Expected
long-term
rate of return
(per annum)
%
Fair value
£b
UK equities 8.0 11.1
Non-UK equities 8.0 8.1
Fixed-interest securities 5.6 3.0
Index-linked securities 4.8 1.9
Property 7.0 2.8
Cash and other 4.5 0.2
Total 27.1
The fair value of the BTPS assets, the present value of the BTPS liabilities based on the ®nancial assumptions set out
above, and the resulting de®cit, together with those of unfunded pension liabilities at 31 March 2002 were:
Assets
£m
Present
value of
liabilities
£m
De®cit
£m
BTPS 27,100 28,900 1,800
Unfunded liabilities ± 30 30
Total de®cit 1,830
Deferred tax asset at 30% (549)
Net pension liability 1,281
If the above amounts had been recognised in the ®nancial statements, the group's net de®ciency and pro®t and loss
reserve at 31 March 2002 would be as follows:
£m
Net de®ciency
Net de®ciency excluding net pension liability (560)
Net pension liability (1,281)
Net de®ciency including net pension liability (1,841)
Pro®t and loss reserve
Pro®t and loss reserve excluding net pension liability (1,819)
Net pension liability (1,281)
Pro®t and loss reserve including net pension liability (3,100)
Notes to the financial statements
BT Group Annual Report and Form 20-F 2002 115