BT 2016 Annual Report Download - page 119

Overview The Strategic Report Governance Financial statements Additional information
125
BT Pensions Committee
Chair’s report
Who we are
I chair the BT Pensions Committee . Our role includes responsibility
for BT’s interactions with the Trustee of the BT Pension Scheme
(BTPS). The BTPS is a defined benefit pension plan with over
300,000 members. It pays out over £2bn a year in benefit
payments and has liabilities of around £50 billion.
I would like to welcome Alison Wilcox who joined the committee
during the year. I would also like to thank Phil Hodkinson, who
stepped down on leaving BT on 31 January, for his contribution
to the committee’s work. Our membership and meeting attendance
are set out below.
Committee members
Meetings
Member Eligible to attend Attended
Isabel Hudsona (chair) 5 5
Tony Chanmugam 5 3
Phil Hodkinsonb4 4
Sir Michael Rake 5 5
Alison Wilcoxc4 4
a Isabel was appointed chair from 1 February 2016.
b Phil was chairman until he left BT on 31 January 2016.
c Alison was appointed to the committee from 1 July 2015.
Further information
You can find more details about BT’s retirement benefit plans
in note 20 to the accounts.
What we have done
We met five times during the year, including a joint meeting with
the BTPS Trustee. The chart opposite shows how we allocated
our time.
13%
39%
Risk management and
investment strategy
Other
9%
BTPS administration
8%
Funding
Allocation of time
31%
Pensions legislation and
governance
BT management also provides regular updates on BT’s performance
and strategy at BTPS Trustee meetings and holds additional sessions
with the Trustee Board. During the year, this included presenting
to the Trustee on the acquisition of EE and developments in relation
to Ofcom’s Strategic Review of Digital Communications.
Areas of work
Some key areas of work carried out in the year are set out below:
• Risk management and investment strategy: we reviewed the
risks posed to BT by the BTPS and discussed potential alternative
risk management strategies, including dierent approaches to
investment.
At each meeting we reviewed the investment performance
and risk associated with the BTPS. For the pension scheme’s
accounting year to 30 June 2015, the investment return was
8.3%. This was above the scheme’s benchmark return of 6.9%.
At the Joint Board meeting with the Trustee we discussed
planned changes to the scheme’s governance on investment
matters. We also provided views during the year to the Trustee
on various elements of the investment strategy, including
interest rate and equity hedging.
• Funding: we received regular updates on the development
of the funding position since the 30 June 2014 valuation.
This included considering draft results of the annual funding
update required to be carried out by the Trustee at 30 June
2015.
We have discussed the impact on the liabilities of the BTPS from
the continued low interest rate environment. We also considered
how the acquisition of EE strengthens the covenant and support
BT provides to its pension schemes.
• Pensions legislation and governance: there have been a
number of recent major changes to pensions legislation. We
spent time considering the impact of legislation that introduced
greater freedom and choice to members of defined contribution
pension schemes from 6 April 2015. This legislation has
consequences for members of defined benefit pension schemes
who wish to take a transfer of their benefits.
We also considered the impact of changes to the State Pension
system from 6 April 2016 and the rules on individuals’ lifetime
and annual allowances. We dealt with other governance matters
including reports on the governance of BT’s pension schemes
other than the BTPS, an update to the BTPS trust deed and rules
and reviewing trustee appointments.
Isabel Hudson
Chair of the BT Pensions Committee
4 May 2016
“This year the committee has considered a broad
range of topics, including the impact of recent
nancial market volatility and the positive impact
on the covenant that BT provides in support of
our pension schemes following the successful
completion of our acquisition of EE.”
“