BT Pension Scheme expects further deficit fall

BT scheme says it is confident its objective to be fully funded by 2030 will be achieved

Jonathan Stapleton
clock • 2 min read
Nilsson: We believe we have an enduring funding solution. Photography by Rob Kennard
Image:

Nilsson: We believe we have an enduring funding solution. Photography by Rob Kennard

The £57bn BT Pension Scheme (BTPS) expects its funding position to improve further as a result of sponsor contributions and higher than assumed returns on growth assets.

The scheme's 2021 annual report and accounts - published today (7 October 2021) - said that since it announced its triennial pension valuation in May, which revealed its deficit had fallen from £11.3bn at 30 June 2017 to £7.98bn at the end of June last year, it had made further "good progress" which had seen its position improve further.

It said it expected that, since the date of the 2020 valuation, its funding deficit had improved by £3.4bn to an overall deficit on a technical provisions basis of around £4.6bn.

It said the main reasons for the reduction in the deficit are the deficit contributions paid by BT - which include an asset-backed funding arrangement of £1.66bn - and a higher than assumed return on the scheme's growth assets.

BT Pension Scheme Management chief executive Morten Nilsson said: "With this reduction in deficit, the agreed contingent contributions should we fall behind plan, and with the increased resilience in the investment strategy, we believe we have an enduring funding solution giving us greater confidence that the scheme's objectives will be achieved."

BT and the BTPS trustees have agreed a recovery plan whereby BT will pay additional contributions in the expectation of returning the scheme to a fully-funded position by 30 June 2030.

Under this recovery plan, BT made deficit contributions of £500m, £1.66bn and £400m in March 2021, May 2021 and June 2021 respectively, with further contributions of £500m due in March 2022 and June 2023, and £400m due in June 2022 and March 2023.

The scheme said that, over the last 12 months, its equity-like assets produced a return of 14.4%, which was above the expected return by 9.8%. Over the last three years, it said the equity-like asset return was 7.2% per annum, which was ahead of expectations by 2.6 percentage points per annum.

More on Global

Industry Voice: Why climate change also matters for government bond investing

Industry Voice: Why climate change also matters for government bond investing

The global sovereign debt market is one of the largest asset classes in the world, and yet it has typically lagged other asset classes when it comes to integrating climate change considerations. The reality is, sovereign debt investors are exposed to...

Henry Odogwu , FTSE Russell
clock 02 December 2019 • 4 min read
Multi-sector credit: Flexibility amid shifting markets

Multi-sector credit: Flexibility amid shifting markets

Better long-term results for investors may be possible through a multi-sector approach to credit, says PIMCO.

Sonali Pier and Eve Tournier, PIMCO
clock 11 April 2019 •
 wall-street-bull-2016.jpeg

Megatrends: Understanding the tech revolution

Partner Insight: How have companies like Amazon contributed to the megatrend tech revolution?

Hardeep  Tawakley
clock 10 September 2018 •
Trustpilot