BT 2007 Annual Report Download - page 141

35. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES continued
2007
£m
2006
£m
Reconciliation of funded status under US GAAP
Projected benefit obligation in excess of scheme assets (293) (4,437)
Unrecognised prior service costs –31
Other unrecognised net actuarial losses –1,802
Net minimum additional pension liability –(953)
Net amount recognised under US GAAP (293) (3,557)
The benefit obligation and pension cost for the BTPS were determined using the following assumptions at 1 January 2006 and
1 January 2005. For the current financial year the group has early adopted the change in measurement date provisions of FAS 158,
and have changed the measurement date to the year end date of 31 March 2007. The current year assumptions are disclosed in
note 29.
2006
per annum
%
2005
per annum
%
Discount rate 4.7 5.3
Rate of future pay increases 3.4 3.6
Rate of future pension increases 2.6 2.6
Contributions expected to be paid to the BTPS during the 2008 financial year are estimated at £748 million including £320 million
of deficiency contributions.
Estimated future benefit payments are as follows:
£m
Year ending 31 March 2008 1,526
Year ending 31 March 2009 1,591
Year ending 31 March 2010 1,671
Year ending 31 March 2011 1,768
Year ending 31 March 2012 1,862
1 April 2012 to 31 March 2017 10,748
Asset allocation
The Trustees of the BTPS 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 BTPS. For the 2007
financial year the group has early adopted the change in measurement date provisions of FAS 158, and has changed the
measurement date to the year end date of 31 March 2007. Therefore the 2007 financial year disclosure for each major category of
plan assets and the percentage of the fair value of total plan assets is disclosed in note 29.
The prior year disclosures are presented below:
Period ended 31 December 2005
Fair value
£bn %
Target
%
Equities 20.3 59 58
Fixed interest securities 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
The assumption for the expected return on scheme assets is a weighted average based on an assumed expected return for each
asset class and the proportions held for each asset class at the beginning of the year. The expected returns on bonds 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 on future returns. The expected
return of 7.1% per annum used for the calculation of pension costs for the year ended 31 March 2006 is consistent with that
adopted for IAS 19.
Consolidated financial statements Notes to the consolidated financial statements
140 BT Group plc Annual Report & Form 20-F