BT pays £2bn into pension fund to tackle deficit

Britain's largest private sector retirement plan had a £4.1bn shortfall at the end of June, the company said in a statement.This is down from a £9bn deficit in 2008 when the scheme was last evaluated. Under an agreement with its pension trustees, BT will look to eliminate the deficit within ten years. BT said this month's £2bn upfront payment, made up of £1.5bn in cash supplemented by recent borrowings, will be followed by nine annual deficit payments of £325n up to 2021. "I am pleased that we have been able to reach an agreement with the trustee," said Ian Livingston, the BT chief executive. "This agreement under which the company makes an immediate contribution to the scheme of almost half of the deficit reflects BT's financial strength and re-affirms our commitment to the Scheme. "BT's long-term sustainable cash generation has improved significantly since the 2008 valuation and we remain focused on improving BT's financial strength, investing in our future and enhancing shareholder returns." The new deal compares to a previous payment plan which ran over 17 years and started off at an annual payment of £525m which would then rise further. BT shares jumped 6pc to 233.7p in early trading, taking the shares back to levels before the 2008 financial crisis.