BT 2006 Annual Report Download - page 121

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35. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
The benefit obligation and pension cost for the main pension scheme were determined using the following assumptions at
1 January 2004, 2005 and 2006:
2006
per annum
%
2005
per annum
%
2004
per annum
%
Discount rate 4.7 5.3 5.5
Rate of future pay increases 3.4 3.6 3.6
Rate of future pension increases 2.6 2.6 2.6
Contributions expected to be paid to the BTPS during the 2007 financial year are estimated at £630 million, including £232
million of deficiency contributions.
Estimated future benefit payments are as follows:
£m
Year ending 31 March 2007 1,421
Year ending 31 March 2008 1,458
Year ending 31 March 2009 1,512
Year ending 31 March 2010 1,577
Year ending 31 March 2011 1,655
1 April 2011 to 31 March 2016 9,491
2006 2005
£m £m
Changes in scheme assets
Fair value of scheme assets at the beginning of the year 29,169 26,675
Actual return on scheme assets 6,039 3,419
Employer contributions
a
450 382
Employee contributions 21 50
Other changes –7
Benefits paid or payable (1,385) (1,364)
Translation (1) –
Fair value of scheme assets at the end of the year 34,293 29,169
2006 2005
£m £m
Funded status under US GAAP
Projected benefit obligation in excess of scheme assets (4,437) (5,167)
Unrecognised prior service costs
b
31 55
Other unrecognised net actuarial losses 1,802 2,577
Net amount recognised under US GAAP (2,604) (2,535)
aThe employer contributions for the year ended 31 March 2006 includes special contributions of £54 million (2005 – £6 million).
bUnrecognised 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.
Asset allocation
The Trustees of the main pension scheme approve the target asset allocation as well as deviation limits. The objective of the
investment activities is to maximise investment returns within an acceptable level of risk, taking into consideration the liabilities of
the main pension scheme.
Year ended 31 December 2005
Fair value
£bn %
Target
%
Equities 20.3 59 58
Fixed interest bonds 5.4 16 16
Index linked securities 3.2 9 9
Property 4.2 12 12
Cash and other 1.2 4 5
34.3 100 100
Year ended 31 December 2004
Fair value
£bn %
Target
%
Equities 18.3 63 63
Fixed interest bonds 4.4 15 16
Index linked securities 2.7 9 9
Property 3.8 13 12
29.2 100 100
Notes to the consolidated financial statements BT Group plc Annual Report and Form 20-F 2006 119