Pension Scheme Valuation

BT Group PLC
24 April 2006




    DC06- 192                                   April 24th, 2006



    TRIENNIAL VALUATION REVIEW OF THE BT PENSION SCHEME



    BT and the Trustees of the BT Pension Scheme (BTPS) today announced that
    discussions on the triennial funding valuation of the BTPS (as at 31
    December 2005) and the associated funding plan were continuing, and that
    their conclusions would be announced some time after the preliminary
    announcement of the BT results for the year to 31 March 2006. In particular,
    they will examine the implications of recent pensions legislation,
    regulations and draft guidelines for the Crown Guarantee given on
    privatisation, and hence for any new funding plan. Further regulatory
    guidance is also expected within the next few weeks on the funding of
    Defined Benefit pensions schemes, following a recent consultation.

    Sir Christopher Bland, Chairman of BT said: 'BT stands fully behind its
    pension promise to pensioners and members. The existing Guarantee, which
    applies only on a winding up of the Company, represents an added
    reinforcement to the company's covenant and an extra layer of security for
    BT's pensioners. The Scheme is well-managed and assets have grown very
    strongly in recent years'.

    Sir Tim Chessells, Chairman of the Trustees said: 'It is in the interests of
    all BT pensioners and Scheme members that we understand fully how the
    Guarantee - which is an important insurance policy for many members -
    interacts with the new laws.'

    Funding valuation

    The last full triennial valuation - as at 31 December 2002 - concluded that
    there was a funding deficit of £2.1 billion, which BT agreed to repay at
    £232m per annum. This sum is additional to regular employer contributions.
    The BTPS had assets at 31 December 2002 of £23bn and this had risen to over
    £34bn at 31 December 2005.


    Accounting valuation

    BT's IAS19 accounting deficit in relation to the BTPS at 31 March 2005 was
    £4.7bn (£3.3bn net of tax) and is estimated to have fallen to about £2.5bn
    (£1.8bn net of tax) as at 31 March 2006.

Inquiries about this news release should be made to the BT Group Newsroom on its
24-hour number: 020 7356 5369. From outside the UK dial + 44 20 7356 5369. All
news releases can be accessed at our web site: http://www.bt.com/newscentre


    NOTES TO EDITORS

* the BT Pensions Scheme (BTPS) is a Defined Benefit (DB) scheme and was closed
to new members on 1 April 2001. A Defined Contribution (DC) scheme, the BT
Retirement Plan, is in place for those joining since 1 April 2001.

* the Guarantee is set out in section 68 of the 1984 Telecommunications Act, as
amended by the 2003 Communications Act

* the Guarantee applies, on a winding up of the company, to pensions liabilities
transferred to the company on 6 August 1984. It covers the pensions entitlement
for anyone who joined the Scheme before that date. The Scheme Actuary estimates
that the Guarantee covers about three quarters of current Scheme liabilities.
The Guarantee does not apply in relation to those joining the Scheme after 6
August 1984. Recent pensions regulations state that legislative provisions on
scheme funding - the statement of funding principles, recovery plans, regulatory
guidance etc under Part 3 of the Pensions Act 2004 - do not apply to guaranteed
parts of pensions schemes; this means the guaranteed part remains subject to the
existing BTPS Trust Deed rules. In addition, the Pensions Protection Fund levy
is lowered where risk on insolvency is reduced by virtue of a guarantee.

* the existing Schedule of Contributions following the 2002 triennial review
(where BT pays £232m per annum) continues until such time as agreement is
reached between BT and Trustees on any new funding plan.

* the formal date by which a conclusion on the current triennial review must be
reached is 31 March 2007

* the Pensions Regulator (TPR) is currently reviewing responses to its
consultation on draft guidance on the Funding of DB Schemes. A final statement
is expected shortly, and this will offer guidance to those parts of schemes not
subject to a guarantee.

* BT is scheduled to publish its preliminary results for year end 31 March 2006
on 18 May 2006, which will include details of the finalised IAS19 pensions
position.

About BT

BT is one of the world's leading providers of communications solutions and
services operating in more than 160 countries. Its principal activities include
networked IT services, local, national and international telecommunications
services, and higher-value broadband and internet products and services. BT
consists principally of four lines of business: BT Global Services, Openreach,
BT Retail and BT Wholesale.

In the year ended 31 March 2005, BT Group's revenue was £18,623 million with
profit before taxation of £2,354 million.

British Telecommunications plc (BT) is a wholly-owned subsidiary of BT Group and
encompasses virtually all businesses and assets of the BT Group. BT Group plc is
listed on stock exchanges in London and New York.


For more information, visit www.bt.com/aboutbt


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