BT Group put in place a new deficit recovery plan for the BT Pension Scheme, including £2.7 billion ($3.7 billion) in contributions to be paid by 2023, to ensure the plan is fully funded by 2030.
The plan sponsor and trustees of the London-based pension fund also agreed to yearly contributions of £600 million between 2023 and 2030, as well as additional annual cash payments of £180 million, beginning immediately for up to 13 years, a spokeswoman confirmed.
The BTPS deficit was £8 billion as of June 30, down from £11.3 billion in 2017, according to its latest triennial valuation. The pension fund's funding level was 88% as of June 30, compared with 81% as of June 30, 2017.
The £57.3 billion pension fund reduced its deficit over the period through £4.5 billion in contributions made by the sponsor and lower projections of future life expectancy for the fund's participants, the company said in a news release.
"Throughout the valuation process, we've worked closely with BT developing and agreeing a solution which allows BT to invest whilst providing the scheme with upfront funding and additional funding if the deficit increases," Otto Thoresen, chairman of the fund's trustees, said in the release.
"The agreement, together with the ongoing derisking of the investment strategy, provides an enduring solution giving us greater confidence that we will achieve our objectives," he added.
The pension fund had a 63% allocation to cash flow matched assets and a 37% allocation to growth assets as of June 30.
The next triennial valuation will be completed in June 2023. Potential additional payments of up to £200 million per year were also agreed in efforts to counter any future deficit increases above £1 billion.
