BT Group (“BT”) and the BT Pension Scheme (“BTPS”) have agreed the 30 June 2026 triennial funding valuation (“2026 valuation"):

• The Scheme’s funding position has continued to improve, with the deficit reducing from £3.7bn at June 2023 to £2.7bn at June 2026, and the funding level increasing from 91.0% to 92.3%.
  
  
• Payments agreed at the 2023 valuation will address £2.1bn of the deficit and will be substantially replaced by zero-coupon bonds shortly after this announcement. Payments scheduled directly to the BTPS totalling £30m will be brought forward and paid in FY27; the remaining FY28-FY31 scheduled contributions will be replaced with zero-coupon bonds with the same payment profile, issued by BT. BT will continue to make annual payments of £180m under the asset-backed funding arrangement established in 2021.

• BT will need to provide £282m of additional funding to ensure the BTPS remains on track to reach full funding by 2030. The additional BT funding of £282m will be provided shortly through a zero-coupon bond maturing in 2033.

• The above measures will substantially reduce the funding deficit, to around £0.3bn, which will be addressed by expected future investment returns to 2030. No further deficit contributions are expected to be required for BTPS to reach full funding.

• The wider package of measures both improves the security of the Scheme and provides BT with greater corporate flexibility, reflecting the BTPS’s improved funding position, BT’s improved covenant, and additional security agreed as part of the valuation.

The wider package:

• provides £4bn of security, through a new charge over EE shares, giving the BTPS extra protection in the unlikely event of BT becoming insolvent;
• allows shareholder distributions of up to £1.5bn in FY27, increasing to £2.0bn by FY30, without triggering additional payments to BTPS;
• moves to a more objective test to determine if a refund is paid to BT; and
• establishes principles for addressing a deficit if one exists at a future triennial valuation.

Patricia Cobian, BT Group Chief Financial Officer, said: “This agreement supports our capacity to continue to invest in next-generation networks and transform BT. It reflects our disciplined approach to capital allocation, balancing long-term investment, our pension commitments, sustainable dividend growth and a strong balance sheet.”

Jill Mackenzie, Trustee Chair of the BTPS, said: “We are pleased with the progress made since the last valuation despite high levels of macroeconomic volatility and uncertainty. The deficit has reduced, security strengthened and we remain on track to achieve full funding by 2030.”

Read the full statement here: BT Group announces triennial pension valuation - (BT.A) | London Stock Exchange