UK - The £35bn (€41.2bn) BT pension fund narrowed its deficit from £5.2bn to £3.7bn in the last three months of 2010 following a cash injection from the scheme's sponsor and improvement in market conditions.

A spokesman for the group attributed the scheme's performance - measured according to IAS19 - to the £525m deficit payment, in line with a three-year agreement with the UK telecommunications regulator as part of the scheme's 2008 triennial review.

That review, which took place at the bottom of the market, estimated the deficit at just over £9bn.

Third-quarter results posted yesterday recorded 7% returns on the scheme's investment portfolio in calendar year 2010 - the result of a £1.5bn increase in asset values.

The results were also boosted by a government decision last year to change the benchmark UK pension funds use to measure pension payment increases from the retail price index to the generally lower consumer price index. 

BT claims this change reduced its deficit by £2.9bn in 2010.

Although the spokesman declined to say the group was pleased with the scheme's figures today, he quoted an official statement that it was "making good progress".

The regulator is currently considering options for BT to pay down its deficit after it announced this time last year that it had "substantial concerns" over the scheme's ability to meet its liabilities.

Details of the recovery plan will be announced after the next review scheduled for the end of 2011.

In the meantime, the government has underwritten scheme member payments in the event of insolvency as a result of a High Court decision last October.

The trustee who brought the claim said at the time it was intended to clarify the guarantee, not as a result of concerns over the group's solvency.