The British Telecommunications Pension Scheme, London, almost halved its deficit in a year due to rising bond yields and strong stock investment performance, according to preliminary annual results released today.
As of March 31, the £36 billion ($68.036 billion) fund's deficit totaled £1.8 billion, compared with £3.3 billion a year before, said Mike Bartlett, BT's chief press officer. BT plans to contribute about £630 million to the pension scheme, including an annual amount of £232 million until the deficit is closed.
The pension plan, which is the largest in the United Kingdom, is managed by Hermes Pensions Management. The plan returned 20.8% overall in 2005, according to Charlie Metcalfe, Hermes' deputy chief executive and head of business development.
"The investment strategy has been changing consistently over the past several years," Mr. Metcalfe said in a telephone interview. "We've continued to reduce U.K. equities exposure as well as the overall equities exposure, shifting (assets) into alternative assets such as private equity, absolute returns and commodities. The fixed-income element has also increased slightly.
"We will continue to focus on alternatives; that will definitely continue," he added.