BT 2016 Annual Report Download - page 200

206 BT Group plc
Annual Report 2016
In the unlikely event that the group were to become insolvent there are additional protections of BTPS members’ benefits:
Feature Detail
Crown
Guarantee
The Crown Guarantee was granted by the Government when the group was privatised in 1984 and would only come
into effect upon the insolvency of BT.
The Trustee brought court proceedings to clarify the scope and extent of the Crown Guarantee. The Court of Appeal
judgment on 16 July 2014 established that:
– the Crown Guarantee covers BT’s funding obligation in relation to members of the Scheme who joined post-
privatisation as well as those who joined pre-privatisation (subject to certain exceptions);
– the funding obligation to which the Crown Guarantee relates is measured with reference to BT’s obligation to pay
deficit contributions under the rules of the Scheme.
The Crown Guarantee is not taken into account for the purposes of the actuarial valuation of the Scheme and is an
entirely separate matter, only being relevant in the highly unlikely event that BT became insolvent.
Pension
Protection
Fund (PPF)
The Pension Protection Fund (PPF) may take over the Scheme and pay benefits not covered by the Crown Guarantee to
members.
There are limits on the amounts paid by the PPF and the PPF would not provide exactly the same benefits as those in
the Scheme.
Other benefit plans
In addition to the BTPS, the group maintains benefit plans around the world with a focus on these being appropriate for the local market
and culture.
The EEPS is the largest defined benefit plan sponsored by the group after the BTPS with defined benefit liabilities of around £700m.
The scheme’s assets are invested across a number of asset classes including UK listed equities and unit trusts (25%), property (16%),
alternative assets (35%) and fixed income assets (24%). A funding valuation of the EEPS is being carried out as at 31 December 2015.
The group is currently paying deficit contributions of £20m each year to meet the deficit at the 31 December 2012 valuation of £130m.
The EEPS also has a defined contribution section with around 12,500 active members.
The BT Retirement Saving Scheme (BTRSS) is the largest defined contribution scheme maintained by the group with around 29,500
active members. In the year to 31 March 2016, the group contributed £114m to the BTRSS.
21. Own shares
Treasury sharesaEmployee share ownership trustaTotal
millions £m millions £m millions £m
At 31 March 2014 232 (626) 62 (203) 294 (829)
Own shares purchasedb25 (102) 55 (218) 80 (320)
Share options exercisedb,c (256) 724 (51) 173 (307) 897
Executive share awards vested – – (25) 87 (25) 87
At 31 March 2015 1(4) 41 (161) 42 (165)
Own shares purchasedb46 (211) 22 (104) 68 (315)
Share options exercisedb,c (39) 176 (24) 102(63) 278
Executive share awards vested – – (22) 87 (22) 87
At 31 March 2016 8(39) 17 (76) 25 (115)
a At 31 March 2016, 8,170,876 shares (2014/15: 1,009,913) with an aggregate nominal value of £nil (2014/15: £nil) were held at cost as treasury shares and 16,600,756 shares (2014/15:
40,567,778) with an aggregate nominal value of £1m (2014/15: £2m) were held in the Trust.
b See group cash flow statement on page 169. In 2015/16 the cash paid for the repurchase of ordinary share capital was £315m (2014/15: £320m). The cash received for proceeds on the issue of
treasury shares was £90m (2014/15: £1,201m).
c Includes share option exercises of nil (2014/15: 2m) relating to other plans.
The treasury shares reserve represents BT Group plc shares purchased directly by the group. The BT Group Employee Share Ownership Trust
(‘the Trust’) also purchases BT Group plc shares.
The treasury shares and the shares in the Trust are being used to satisfy the group’s obligations under its employee share plans. Further
details on Employee Saveshare Plans and Executive share plans are provided in note 22.
20. Retirement benefit plans continued