UK – The British Telecom Pension Scheme’s deficit under the FRS17 accounting measure has been reduced by 43% to 3.6 billion pounds (5.3 billion euros).

Telecoms firm BT said: “The FRS17 position at March 31 2004 showed a deficit of 3.6 billion pounds, net of tax, being a reduction of 2.7 billion pounds (43%) since March 31 2003.” As at the end of March 2003, the deficit was 6.3 billion pounds.

The value of the scheme’s assets has risen to 26.9 billion pounds from 21.5 billion pounds a year ago. Liabilities are up to 32 billion pounds from 30.5 billion pounds.

BT added that it has cut the discount rate used to calculate the scheme’s liabilities to 2.83% from 3.08% in 2003. And the future wage growth assumption was cut to one percent from 1.5%.

The group said that “strong cash generation” enabled it to make an early payment of 380 million pounds in deficiency contributions to the BTPS, which it said represents most of the deficiency payments for 2004/5 and 2005/6.

BT added that it made a pension prepayment relating to the BTPS of 1.17 billion at March 31 this year. It made a 630 million-pound payment last year.

It said that it would continue to account for pension costs using the previous SSAP24 standard for 2004/5.

The company reported profit for the full-year profit before tax, goodwill amortisation and exceptional items up 10% at two billion pounds.

BT chairman Sir Christopher Bland said: "The group has continued to make good progress this year, and delivered strong financial results while continuing to transform the business.

“We generated free cash flow of over two billion pounds and reduced net debt to 8.4 billion pounds while continuing to invest for the future.”