BT 2005 Annual Report Download - page 101
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28. Pension costs continued
The expected nominal rate of return and fair values of the assets of the BTPS at 31 March were:
31 March 2005 31 March 2004 31 March 2003
Expected long-
term rate of
return
(per annum) Asset fair value
Expected long-
term rate of
return
(per annum) Asset fair value
Expected long-
term rate of
return
(per annum) Asset fair value
%£bn % %£bn % % £bn %
UK equities 8.0 9.6 32 8.2 9.2 34 8.2 7.4 34
Non-UK equities 8.0 9.0 30 8.2 8.1 30 8.2 6.4 30
Fixed-interest securities 5.4 4.6 16 5.3 4.0 15 5.2 3.1 14
Index-linked securities 4.4 2.8 10 4.4 2.3 9 4.3 1.7 8
Property 6.8 3.6 12 6.8 3.3 12 7.0 3.3 15
Cash and other 4.0 – – 4.0 – – 4.0 (0.4) (1)
Total 7.1 29.6 100 7.3 26.9 100 7.4 21.5 100
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 2005 and 31 March 2004 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 2005 31 March 2004
Assets
£m
Present value
of liabilities
£m
Deficit
£m
Assets
£m
Present value
of liabilities
£m
Deficit
£m
BTPS 29,550 34,270 4,720 26,900 32,000 5,100
Other liabilities 26 87 61 –3636
Total deficit 4,781 5,136
Deferred tax asset at 30% (1,434) (1,541)
Net pension liability 3,347 3,595
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:
2005
£m
2004
£m
a
Net assets (deficiency)
Net assets as reported 3,851 3,066
SSAP 24 pension prepayment (net of deferred tax) (776) (820)
SSAP 24 pension provision (net of deferred tax) 31 25
Net pension liability under FRS 17 (3,347) (3,595)
Net deficiency including net pension liability (241) (1,324)
2005
£m
2004
£m
Profit and loss reserve
Profit and loss reserve, as reported 2,416 1,632
SSAP 24 pension prepayment (net of deferred tax) (776) (820)
SSAP 24 pension provision (net of deferred tax) 31 25
Net pension liability under FRS 17 (3,347) (3,595)
Profit and loss reserve including net pension liability (1,676) (2,758)
a
Restated – see note 1
100 BT Group plc Annual Report and Form 20-F 2005 Notes to the financial statements