UK - The UK's largest pension fund has seen its assets shift under IAS19 accounting rules from a technical surplus of over £2bn (€2.16bn) in March 2008 into a deficit of £1.7bn by the end of last year because of the swing corporate bond pricing, according to BT, its sponsoring employer.

Details of the telecoms giant's third quarter results state the BT defined benefit pension fund had decreased in value by £3.7bn and the fund was effectively worth £31.5bn on 31 December 2008, as its liabilities were £33.8bn compared with £34.4bn on 31 March 2008.

This calculation was made based on an discount rate attached to a AA bond rate of 6.45% - which had earlier been 6.85% in March - and an inflation rate of 2.7%, compared with 3.5% on 31 March 2008.

These figures follow changes announced in November which are designed to alleviate the liability pressures on the pension fund and all parties involved. (See earlier IPE story: BT in talks about pension overhaul)

This also follows news earlier this week that the European Commission had ordered BT to pay almost £17m to the Pension Protection Fund.

BT was found to be partially in breach of EU competition laws because the former state-owned telecoms firm has a 75% Crown guarantee should the scheme collapse, and the guarantee means it was not required to pay into the PPF. (See earlier IPE story: EC lets BT off with £17m ruling)

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