BT’s pension fund ‘fell by £11bn’ after mini-budget
BT’s pension scheme has revealed the value of its assets plummeted by an estimated £11bn in recent weeks, after the meltdown in UK government bond markets following Kwasi Kwarteng’s mini-budget.
The disclosure in the annual report published by BT Pension Scheme (BTPS), one of the UK’s largest company retirement plans with almost 270,000 members, provides one of the first insights into the scale of the financial impact on funds.
Pension schemes with more than £1tn invested in them came under severe strain following a dramatic rise in interest rates on long-dated UK government bonds in the days after the disastrous mini-budget on 23 September.
The Bank of England, which was forced to intervene five days later with a promise to buy up to £65bn of government debt in a bid to steady the situation, said had it not intervened then money managed on behalf of pensioners across the country “would have been left with negative net asset value” and cash demands they could not have met.
In the year to the end of June, the value of assets in the BTPS fell from £57bn to £47bn year-on-year. However, in the last few weeks of September through to 6 October, when the annual report was signed off, their value plunged by about a further quarter.
“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,” the BTPS said. “Prior to the Bank of England’s gilt-market intervention, there was an estimated £11bn fall in the value of the scheme’s assets.”
The scheme’s funding position, which compares the market value of assets with liabilities, was 92% at the end of the reporting year on 30 June. The scheme paid out £2.5bn in benefits to members
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