BT's has agreed to make a £2bn pension scheme contribution this month to help plug its £4.1bn deficit.
The telecoms giant and its scheme trustee have agreed the deficit stands at just over £4bn - a massive improvement on its December 2008 position of £9bn.
BT's dividend payments have suffered in recent years due to pressure from its massive scheme deficit.
BT chief executive Ian Livingston said: "This agreement under which the company makes an immediate contribution to the scheme of almost half of the deficit reflects BT's financial strength and re-affirms our commitment to the scheme.
"BT's long-term sustainable cash generation has improved significantly since the 2008 valuation and we remain focussed on improving BT's financial strength, investing in our future and enhancing shareholder returns."
The BT scheme is the largest private sector pension fund in the country.
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