BT cuts pension deficit by £1.4 billion

The BT Pension Scheme (BTPS) has reduced its deficit by more than £1.4 billion due to an increase in assets by £2.8 billion.

The pension scheme’s annual report revealed that at the end of 2009 the deficit had fallen from £9 billion to £7.6 billion.

The BTPS saw an overall investment return on scheme assets of 12.2% compared with a benchmark return of 11.6%.

BT has agreed with the scheme trustee to make deficit repair payments of £525 million, the first of which was paid in December 2009. In 2012, the payment will be £583 million and will then increase each year by 3%.

The announcement comes ahead of a court case in early July to clarify the scope of the Crown Guarantee of BT’s pension liabilities, given by the government when the company was privatised in 1984.

Rod Kent, chairman of BTPS, said: “2009 was a very active year for the BT pension scheme. Equity and related markets plunged some 30% in the first quarter, only to rebound even more strongly in the rest of the year.

“Negotiations with BT and the Pension Regulator concerning the deficit and recovery plan arising from our three yearly actuarial valuation dominated much of the trustee’s thinking, and important decisions were taken to seek judicial clarification on the precise scope and extent of the Crown Guarantee.”

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