British Telecom reports E7.9bn pension deficit
UK – Phone firm British Telecom has reported a pension deficit under the FRS17 accounting standard of 5.7 billion pounds (7.9 billion euros) as at May 16.
It said that its actuary has completed the triennial valuation of the value of the 22.8 billion pound (32 billion euro) fund. “The results of the_review are in line with the group's expectations,” the company said
Under the SSAP standard, there was a deficit in the scheme of 1.4 billion pounds at the end of March. The deficit would be amortised over the average remaining working lives of members.
It would increase its annual payments to the fund by 32 million pounds to 232 million pounds from December 2003. It added that the valuation showed that assets covered 101% of liabilities.
BT’s main scheme, the defined benefit BT Pension Scheme has been closed to new members since March 2001 and replaced by a defined contribution scheme.
The firm’s total pension costs - expensed within staff costs – was 322 million pounds in the year, down from 2002’s 382 million pounds. “The decline in the pension cost reflects the reduction in the number of active members of the BTPS and the interest credit relating to the balance sheet prepayment.
The DC schemes cost four million pounds, down from five million pounds.
The BT Pension Scheme holds 37 million shares in the company, worth 58 million pounds.
The BTPS had assets worth 22.8 billion pounds at the end of 2002, which BT says was enough to 91.6% of benefits accrued by that date - after allowing for expected future increases in wages and salaries but not taking into account the costs of providing incremental pension benefits for employees taking early retirement under release schemes since that date.