Shares in BT fell in lunchtime trading after its hopes of reducing its pension deficit were quashed, following a ruling by the High Court which denied plans to change the way it calculates what is owed.
The company, with a pension deficit estimated at £14bn, said it had sought a decision from the High Court last month as to whether it would be possible to change the measure of inflation it uses to calculate increases paid to some of its pensioners from the Retail Price Index (RPI).
However, today it said the court had ruled it is "not currently possible" to change the measure. Shares fell 1.7 per cent to 262p on the news.
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"We are disappointed with the decision and will now consider the judgment in detail in order to decide next steps, including the possibility of an appeal," said BT.
While the 83,000 or so members of Section C of its scheme use the RPI, which currently stands at 4.1 per cent, the other 213,000 members, known as Sections A and B, use the consumer prices index (CPI), which is at three per cent.
The move is the latest effort by BT to bring its burgeoning pension costs under control. Earlier this month it secured the backing of more than 10,000 employees on a series of changes, including shutting its final salary scheme to managerial staff.
In October researchers at RBC Capital Markets suggested a Bank of England interest rate hike could cut its shortfall to as little as £4.4bn.
The researchers suggested a rate hike would give BT the opportunity to increase its discount rate, a reference rate linked to bond yields. Together with changes in life expectancy assumptions, this would reduce the scheme's liabilities.
The company is currently thought to be putting the finishing touches to a tri-annual revaluation of the scheme.
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