BT 2014 Annual Report Download - page 155

152 Financial statements
19. Retirement beneƬt plans
Background
The group has both dened benet and dened contribution retirement benet plans. The group’s main plans are in the UK and the largest by
membership is the BT Pension Scheme (BTPS) which is a dened benet plan that was closed to new entrants on 31 March 2001. After that date
new entrants have been able to join a dened contribution plan, currently the BT Retirement Saving Scheme (BTRSS), a contract based arrangement.
DeƬned contribution plans
A dened contribution plan is a pension arrangement under which the benets are linked to contributions paid, the performance of each individual’s
chosen investments and the annuity rates at retirement. Contributions are paid into an independently administered fund. The income statement
charge in respect of dened contribution plans represents the contribution payable by the group based upon a xed percentage of employees’ pay.
The company has no exposure to investment and other experience risks.
DeƬned beneƬt plans
A dened benet plan is a pension arrangement under which participating members receive a pension benet at retirement determined by the plan
rules dependent on factors such as age, years of service and pensionable pay and is not dependent upon actual contributions made by the company
or members. The income statement service cost in respect of dened benet plans represents the increase in the dened benet liability arising from
pension benets earned by active members in the current period. The company is exposed to investment and other experience risks and may need
to make additional contributions where it is estimated that the benets will not be met from regular contributions, expected investment income and
assets held.
Group income statement
The expense or income arising from all group retirement benet arrangements recognised in the group income statement is shown below.
Year ended 31 March
2014
£m
2013
Restated
£m
2012
a Restated
£m
a
Recognised in the income statement before speciƬc items
Current service cost
– dened benet plans 272 225 267
– dened contribution plans 151 136 126
Administration expenses and Pension Protection Fund (PPF’) levy 40 38 30
Total operating expense 463 399 423
Net interest expense on net pensions deƬcit included in speciƬc items (note 8) 235 117 98
Total recognised in the income statement 698 516 521
a Restated to allow for IAS 19 (Revised 2011), see note 1.
Group statement of comprehensive income
Remeasurements of the net dened benet obligation are recognised in full in the group statement of comprehensive income in the year in which
they arise. These comprise the impact on the dened benet liability of changes in demographic and nancial assumptions compared with the start
of the year, actual experience being dierent to those assumptions and the return on plan assets above the amount included in the net pension
interest expense.
Group balance sheet
The net pension obligation in respect of dened benet plans reported in the group balance sheet is set out below.
2014 2013
At 31 March
Assets
£m
Present value
of liabilities
£m
Decit
£m
Assets
£m
Present value
of liabilities
£m
Decit
£m
BTPS 39,939 (46,759) (6,820) 41,344 (47,000) (5,656)
Other plansa174 (376) (202) 222 (422) (200)
Retirement beneƬt obligation 40,113 (47,135) (7,022) 41,566 (47,422) (5,856)
Adjustments due to eect of asset ceilingb – –
Deferred tax asset 1,381 1,313
Net pension obligation (5,641) (4,543)
a Included in the present value of liabilities of other plans is £69m (201213: £72m) related to unfunded pension arrangements.
b There is no limiting eƪect of the asset ceiling as any accounting surplus arising is deemed to be recoverable due to the economic beneƬts available in the form of future refunds or reductions to
future contributions.
At 31 March 2014 £8m (2012/13 £8m) of contributions to dened contribution plans were outstanding and are included within trade and other
payables in the group balance sheet.