BT scheme funding 'on track' despite Mini Budget asset hit

In its annual report and accounts for 2022, the scheme reported that the net value of its assets had fallen since from £57.280bn at 30 June 2021 to £46.900bn at 30 June 2022.

BT Pension Scheme Management chief executive Morten Nilsson said this fall reflected the interaction of its assets and liabilities with changes in long term interest and inflation rate expectations - noting this trend continued beyond the scheme's year end when "unprecedented" gilt market volatility resulted in further reductions in the value of the scheme's assets.

But he added these falls in asset values had not worsened the scheme's funding position.

A note to the accounts quantified the falls in asset values at the scheme since 30 June.

It said: "Following the year-end, there was a significant fall in the value of the scheme's assets, during a period of significant market volatility in the second half of September.

"Prior to the BoE's gilt market intervention, there was an estimated £11bn fall in the value of the scheme's assets. Our hedges have continued perform as expected, and up to the date of signing there has been no worsening in our estimated funding position."

Nilsson said the scheme's deficit reduction plan remained "on track" with the plan set to be fully funded by 2030.

He said an interim assessment as at 30 June 2022 estimated that the scheme's funding position had improved from 88% to 92%, representing a reduction in the funding shortfall from £7.978bn as at 30 June 2020, the date of the scheme's most recent full actuarial valuation, to £4.376bn as at 30 June 2022.

Nilsson said: "The main reasons for the improvement are the deficit contributions paid by BT and a higher than assumed return on the scheme's assets. As a result, no contingent contributions were required from BT Group."