UK - The underfunded BT Pension Scheme (BTPS) has managed to reduce its deficit by 16% following strong returns in 2009.

Exceeding its benchmark, BTPS reported a "satisfactory" 12.2% return, cutting the deficit from just over £9bn (€11.1bn) in 2008 to £7.6bn.

"The general recovery of financial markets in 2009 led to an overall investment return for the Scheme of 12.2%, which is a satisfactory performance," noted Rod Kent, chairman of the BTPS' trustee board, in the report's introduction.

Despite exceeding its benchmark, BTPS was still left with very low growth in real terms. Examining the last three years, it had even seen negative growth of 3% and only expanded by 1.1% when looking over the last ten years of returns.

Last year BT made the first of a number of deficit payments, injecting £525m into the scheme.

Payments will continue for another 16 years, increasing by 3% annually after 2012 in an agreement between BT and the trustees aiming at solving the deficit.

BTPS has been under growing pressure to solve its deficit, with the Pensions Regulator earlier this year expressing "substantial concerns" about the proosal. (See earlier IPE story: BT could face TPR intervention over £9bn deficit)

The fund has also completed its most recent triennial valuation concluding that £2.5bn in additional funding was needed to compensate for members' increasing lifespans.

Further, it noted that 2009 had seen a growing number of scheme members take a lump sum payment of their pension while still actively employed, resulting in a £408m payout.