BT 2016 Annual Report Download - page 196

202 BT Group plc
Annual Report 2016
20. Retirement benefit plans continued
The fair value of the assets of the BTPS analysed by asset category are shown below. These are subdivided by assets that have a quoted
market price in an active market and those that do not (such as investment funds).
2016a2015a
At 31 March
Total assets
£bn
of which
quoted
£bn
b Total
%
Total assets
£bn
of which
quoted
£bn
b Total
%
Equitiesc14.7 11.3 34 14.4 10.6 33
Fixed-interest securities 7.3
5.6 17 7.4 5.7 17
Inflation-linked securities 11.7
10.4 27 11.7 10.5 27
Property 5.5
– 13 4.6 – 11
Alternative assetsd4.6
– 11 4.9 – 11
Cash, derivatives and other (0.7) – (2) 0.4 – 1
Total 43.1 27.3 100 43.4 26.8 100
a At 31 March 2016 and 31 March 2015, the Scheme’s assets did not include any directly held ordinary shares of the company. The Scheme held £9m (2014/15: £9m) of index-linked bonds issued by the
group.
b Assets with a quoted price in an active market.
c At 31 March 2016, the BTPS held £0.8bn of UK equities (2014/15: £0.8bn).
d Alternative assets include absolute return funds and emerging market debt.
Investment performance
The Trustee reports on investment performance against a benchmark which is based on the asset mix and the market returns for each
asset class. BTPS performance against the benchmark for the periods to 30 June 2015 was as follows.
Period ending 30 June 2015
Benchmark
%
Actual
BTPS return
%
Over
performance
%
1 year 6.9 8.3 1.4
3 years 7.2 7.8 0.6
10 years 5.6 6.1 0.5
IAS 19 liabilities
Valuation methodology
The IAS 19 liabilities are measured as the present value of the estimated future benefit cash flows to be paid by each scheme, calculated
using the projected unit credit method. These calculations are performed for the group by professionally qualified independent actuaries.
The expected future benefit payments are based on a number of assumptions including future inflation, retirement ages, benefit options
chosen and life expectancy and are therefore inherently uncertain. Actual benefit payments in a given year may be higher or lower, for
example if members retire sooner or later than assumed, or take a greater or lesser cash lump sum at retirement than assumed.
BTPS liabilities
The estimated duration of the BTPS liabilities, which is an indicator of the weighted average term of the liabilities, is around 15 years
although the benefits payable by the BTPS are expected to be paid over more than 70 years as shown in the graph below. Whilst benefit
payments are expected to increase over the earlier years, the value of the liabilities is expected to reduce.
£bn £bn
0
1.0
0.5
1.5
3.0
2.5
2.0
0
20
10
30
60
50
40
2016 2036 2056 2076 2096
Forecast benefits payable by the BTPSa
Liabilitiesa
Forecast benefit payments (Left axis) Liabilities (Right axis)
Forecast benets payable by the BTPS at 31 March 2016 (unaudited)
aBased on accrued benefits to date.