BT’S mammoth pension deficit will fall by £2.9bn thanks to a change that will link pension payments to the Consumer Prices Index inflation meaure instead of the Retail Prices Index.
The fall in deficit, which stood at £9bn in 2009, will immediately have an impact on interest payments made by the telecoms giant.
It will also have an affect on BT’s contributions to the scheme when the level of deficit is recalculated at its triennial review in 2011. BT has already suggested the deficit has dropped to around £6.6bn since 2009.
The reduced liabilities will mean BT could end up either paying less than its current £525m a year contribution, or paying off the sum sooner than planned.
Future pension increases for 266,000 former workers will now be around 0.75 per cent lower than before, translating to a cut of almost a fifth in payments.
BT has stressed it has no say in the implementation of the new inflation measure, which was applied to all public sector pension schemes by the coalition in July. The City welcomed the move, with shares in the firm jumping almost 3.3 per cent to 161.6p.