Communications giant BT hacked £2.9bn from its pension scheme liabilities as a result of the Government’s decision to switch the pension inflation link from the retail price index to the consumer price index.
BT’s pension shortfall, which stood at £7.9bn at the end of June, has fallen to £5.2bn as of September 30.
Total liabilities stood at £40bn, compared with £41.7bn three months earlier.
BT says the discrepancy between the impact of the switch in inflation measures and the actual reduction in liabilities is due to shifts in the discount rate used to calculate the present value of scheme liabilities.
In calculating the impact of the RPI-CPI switch, CPI was assumed to be 0.75 per cent lower than RPI in the long term, with a difference of 1 per cent a year for the next five years.
The company was only able to apply the change to employees who joined the firm before March 31, 1986, which represents 80 per cent of the membership.