BT 2007 Annual Report Download - page 120

29. RETIREMENT BENEFIT PLANS continued
Changes in the fair value of plan assets are as follows:
2007 2006
£m £m
Opening fair value of plan assets 35,640 29,628
Expected return 2,292 2,070
Actuarial gains 993 4,855
Regular contributions by employer 406 398
Deficiency contribution by employer 520 54
Contributions by employees 18 21
Benefits paid (1,477) (1,385)
Exchange differences (2) (1)
Closing fair value of plan assets 38,390 35,640
The BTPS assets are invested in UK and overseas equities, UK and overseas properties, fixed interest and index linked securities,
deposits and short-term investments. At 31 March 2007, the UK equities included 14 million (2006: 15 million) ordinary shares of
the company with a market value of £43 million (2006: £33 million). The group occupies two properties owned by the BTPS scheme
on which an annual rental of £0.1 million is payable (2006: £2 million).
The expected long term rate of return and fair values of the assets of the BTPS at 31 March were:
2007 2006
Expected long-
term rate of
return
(per annum) Asset fair value Target
Expected long-
term rate of
return
(per annum) Asset fair value Target
% £bn % % % £bn % %
UK equities 7.4 9.8 26 23 7.4 9.9 28 25
Non-UK equities 7.4 11.2 29 31 7.4 10.8 30 32
Fixed-interest securities 4.7 6.5 17 16 4.9 5.6 16 16
Index-linked securities 4.4 3.3 9 10 4.1 3.2 9 10
Property 5.8 4.7 12 13 5.8 4.4 12 12
Cash and other 4.8 2.8 7 7 4.0 1.7 5 5
6.4 38.3 100 100 6.5 35.6 100 100
The assumption for the expected return on scheme assets is a weighted average based on the assumed expected return for each
asset class and the proportions held of each asset class at the beginning of the year. The expected returns on fixed interest and
interest linked securities are based on the gross redemption yields at the start of the year. Expected returns on equities and property
are based on a combination of an estimate of the risk premium above yields on government bonds and consensus economic
forecasts of future returns. The long-term expected rate of return on investments does not affect the level of the obligation but
does affect the expected return on pension scheme assets within the net finance income.
The history of experience gains and losses are as follows:
2007 2006 2005
£m £m £m
Present value of defined benefit obligation 38,779 38,187 34,435
Less: Fair value of plan assets 38,390 35,640 29,628
Net pension obligation 389 2,547 4,807
Experience adjustment on defined benefit obligation 190 (527) (437)
Percentage of the present value of the defined benefit obligation 0.5% 1.4% 1.3%
Experience adjustment on plan assets 993 4,855 1,664
Percentage of the plan assets 2.6% 13.6% 5.6%
The group expects to contribute approximately £748 million to the BTPS, including £320 million of deficiency contributions, in the
2008 financial year.
BT Group plc Annual Report & Form 20-F 119
Financial statements