UK rule change cuts BT pension deficit

Changes to the way the UK government calculates inflation has helped BT reduced its massive pension deficit by a third in the last quarter.

The new government has decided that the consumer prices index (CPI), rather than retail prices index (RPI), will be used as the basis for determining the rate of inflation for pensions.

The impact has help cut liabilities by around £2.9 billion ($3.3b), BT said. At 30 September 2010 the total deficit was £5.2 billion, compared with £7.9 billion at June 30.

BT says it will continue to pay deficit contributions of £525 million in 2010 and 2011.

BT’s stock price rose 3.26% Thursday following the announcement.

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