The BT Pension Scheme (BTPS) has seen its funding deficit fall by £1bn to £2.7bn, with BT Group and the scheme agreeing a package of measures designed to achieve full funding by 2030.

The scheme's latest triennial valuation also showed its funding level rose from 91 per cent to 92.3 per cent over the same period.

Under the agreement, BT will provide an additional £282m of funding through a zero-coupon bond maturing in 2033, alongside measures to address £2.1bn of the existing deficit through previously agreed contributions.

The company confirmed that £30m of contributions scheduled to be paid directly to the scheme would be brought forward to the 2026/27 financial year, while the remaining contributions scheduled between 2027/28 and 2030/31 would be replaced by zero-coupon bonds issued by BT, maintaining the same payment profile.

BT will also continue making annual payments of £180m under the asset-backed funding arrangement established in 2021.

The measures are expected to reduce the scheme's remaining funding deficit to about £300m, which BT expects to address through investment returns by 2030.

As a result, the company said it did not expect to require any further deficit contributions for the scheme to achieve full funding.

The agreement also includes a £4bn security package through a new charge over EE shares, providing additional protection for the scheme if BT becomes insolvent.

Alongside the additional security, the valuation agreement gives BT greater flexibility, allowing shareholder distributions of up to £1.5bn in 2026/27, increasing to £2bn by 2029/30, without triggering additional payments to the scheme.

It also introduces a more objective test to determine whether BT can receive a refund and sets out principles for addressing any funding deficit identified at future triennial valuations.

BT noted the wider package reflected the scheme's improved funding position, the strength of the employer covenant and the additional security agreed as part of the valuation.

BT Group chief financial officer, Patricia Cobian, said: "This agreement supports our capacity to continue to invest in next-generation networks and transform BT.

"It reflects our disciplined approach to capital allocation, balancing long-term investment, our pension commitments, sustainable dividend growth and a strong balance sheet."

Meanwhile, BTPS trustee chair, Jill Mackenzie, welcomed the improvement in the scheme's funding position despite challenging economic conditions.

"We are pleased with the progress made since the last valuation despite high levels of macroeconomic volatility and uncertainty," she said.

"The deficit has reduced, security strengthened, and we remain on track to achieve full funding by 2030."

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