BT Group Share Price Rallied 6.8%, Then Later Fell on BTPS Deal

The BT Group (LON: BT.A) stock price rallied 6.79%, then later fell after the company and the BT Pension Scheme (BTPS) reached an agreement on the triennial funding valuation as of June 30, 2023, and a strategy to address the deficit, known as the recovery plan.

As of June 30, 2023, the funding deficit stood at £3.70 billion, marking a significant reduction from the £7.98 billion reported during the 2020 funding valuation. The reduction is attributed to £4.36 billion in deficit contributions made in the interim.

Annual contribution amounts will remain consistent, with BT Group committing to contribute £600 million each financial year until March 31, 2030. Furthermore, a final payment of £490 million will be made before April 30, 2030.

Additionally, BT Group will continue its payments of £180 million annually as part of the asset-backed funding arrangement established during the 2020 valuation.

The BTPS is actively pursuing a de-risking investment strategy that extends until 2034, enhancing predictability regarding future outcomes. The scheme is on track to achieve total funding by the year 2030.

BT Group has pledged to provide legal protections to the BTPS in a long-term funding framework until 2035. These modifications to contractual safeguards align with statutory obligations under the Pension Schemes Act 2021. 

The agreed-upon amendments to the BTPS's existing stabiliser mechanism offer increased confidence in reaching total funding and boost the likelihood of a potential refund to BT Group in the future.

BT Group’s Chief Financial Officer Simon Lowth said: “I am pleased that the BTPS continues to deliver in line with the long-term plan, despite the uncertainty and headwinds observed since 2020. Building on the framework agreed at the 2020 valuation allowed for a swift conclusion of the 2023 valuation. The agreement allows us to deliver on our strategic initiatives, such as investing in our networks and transforming our business. And it is consistent with our funding priorities of investing in value-enhancing opportunities, supporting our pension funds, paying progressive dividends and maintaining a strong balance sheet.”

Otto Thoresen, BTPS Chairman, said: “The BTPS continues to be on track to fulfil its commitments to members despite high levels of macroeconomic volatility and uncertainty. Our deficit is reducing, funding levels have improved, and we remain on course to be fully funded by 2030.”

BT Group share price. 

The BT Group share price spiked 6.79% to trade at 131.72p from Monday’s closing price of 123.35p, then fell back.