BT Pension Scheme deficit falls on back of recovery plan

According to the scheme’s annual report and accounts, these preliminary figures — which will make part of an actuarial assessment to be published later in the year — compare with a funding deficit of £7.98bn as of June 2020 when the last triennial valuation took place.

The report stated that the reduction in the deficit was primarily due to contributions paid by BT, including an asset-backed funding arrangement of £1.66bn. Higher-than-expected returns on the scheme’s growth assets also contributed to the deficit reduction.

Under a recovery plan agreement, BT will pay additional contributions in the expectation of returning the scheme to a fully funded position by June 2030.

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 deficit repair plan, announced in May as part of BTPS’s triennial valuation, is secured against the company’s EE business.

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.”

Over the past 12 months, the scheme’s equity-like assets produced a return of 14.4 per cent — above the expected return by 9.8 per cent. Over the past three years, the equity-like asset return was 7.2 per cent a year, which was ahead of expectations by 2.6 per cent a year.

The pension fund, which is one of the largest corporate pension schemes in the UK, has assets worth £57bn.

In May, it joined an investors group to create a tool to measure, monitor and compare sovereign bonds’ climate change governance and performance.