BT 2004 Annual Report Download - page 112

31. Pension costs continued
The long-term expected rate of return on investments does not affect the level of the deficit but does affect
the level of the expected return on assets within the net finance cost charged to the profit and loss account
under FRS 17.
The net pension deficit set out below under FRS 17 is as if this standard was fully applied. The fair value
of the BTPS assets, the present value of the BTPS liabilities based on the financial assumptions set out above,
and the resulting deficit, together with those of unfunded pension liabilities at 31 March 2004 and 31 March
2003 are shown below. The fair value of the BTPS assets is not intended to be realised in the short term and may
be subject to significant change before it is realised. The present value of the liabilities is derived from long-term
cash flow projections and is thus inherently uncertain.
31 March 2004 31 March 2003
Assets
£m
Present value
of liabilities
£m
Deficit
£m
Assets
£m
Present value
of liabilities
£m
Deficit
£m
BTPS 26,900 32,000 5,100 21,500 30,500 9,000
Other liabilities –3636 –3333
Total deficit 5,136 9,033
Deferred tax asset at 30% (1,541) (2,710)
Net pension liability 3,595 6,323
If the above amounts had been recognised in the financial statements, the group’s net assets and profit and loss
reserve at 31 March would be as follows:
2004
£m
2003
£m
Net assets (deficiency)
Net assets as reported 3,094 2,642
SSAP 24 pension prepayment (net of deferred tax) (820) (441)
SSAP 24 pension provision (net of deferred tax) 25 23
Net pension liability under FRS 17 (3,595) (6,323)
Net deficiency including net pension liability (1,296) (4,099)
2004
£m
2003
£m
Profit and loss reserve
Profit and loss reserve, as reported 1,660 1,208
SSAP 24 pension prepayment (net of deferred tax) (820) (441)
SSAP 24 pension provision (net of deferred tax) 25 23
Net pension liability under FRS 17 (3,595) (6,323)
Profit and loss reserve including net pension liability (2,730) (5,533)
On the basis of the above assumptions and in compliance with FRS 17 the amounts that would have been
charged to the consolidated profit and loss account and the statement of total recognised gains and losses for
the year ended 31 March 2004 would be as follows:
2004
£m
2003
£m
Analysis of amounts that would be charged to operating profit on an FRS 17 basis
Current service cost 438 444
Past service cost 160
Total operating charge 439 504
Amount that would be charged (credited) to net interest payable on an FRS 17 basis
Expected return on pension scheme assets (1,560) (1,983)
Interest on pension scheme liabilities 1,615 1,694
Net finance expense (return) 55 (289)
Amount that would be charged to profit before taxation on an FRS 17 basis 494 215
Analysis of the amount that would be recognised in the consolidated statement of total
recognised gains and losses on an FRS 17 basis
Actual return less expected return on pension scheme assets 4,130 (6,995)
Experience (losses) gains arising on pension scheme liabilities (290) 1,056
Changes in assumptions underlying the present value of the pension scheme liabilities (500) (1,660)
Actuarial gain (loss) recognised 3,340 (7,599)
BT Annual Report and Form 20-F 2004111 Notes to the financial statements