The board pledged to make the payment when it set out terms for selling Balfour’s consultancy arm Parson Brinckerhoff last year.

But it has now secured agreement to pay the sum into the company pension fund over eight years, starting with a £4m cash payment next year.

In the interim, the pension fund will participate in a Scottish Limited Partnership into which Balfour will transfer PFI assets worth £85m.

Last month Balfour Beatty also cancelled its planned £200m share buyback, arguing the funds were needed to support its balance sheet.

The measures form a key part of Balfour Beatty Group chief executive Leo Quinn’s recovery programme, which seeks to restore the firm’s cash position.

He  said: “We are pleased that the pension fund trustee has worked with us to re-profile the pension payments, in light of the cancelled share buy-back.

“This gives a clear plan on how the pension deficit will be reduced over time, whilst maintaining balance sheet flexibility as we drive the required organisational change and performance improvement, as set out in the Build to Last programme we announced last week.”

Adrian Mathias, chairman of the pension fund Trustee said: “We are pleased to have reached agreement with the company on this matter.

“We recognise the importance of a strong balance sheet to the company and welcome the opportunity to participate in the proposed Scottish Limited Partnership.”