Monthly payments to the defined pension scheme had increased to an annual payment of nearly £12m, paid in monthly instalments.
But a new deal reached with pension trustees will see the payment cut to £3.3m a year, plus inflationary increases.
The scheme funding position at 31 March 2022 was a deficit of £25.1m – a funding level of around 97%.
Going forward an assessment of the scheme funding position will be carried out each 31 March. If the funding level is more than 101%, Costain’s contributions will stop for a year.
Alex Vaughan, chief executive officer, said: “This is really positive news for all Costain’s stakeholders.
“It ensures we can meet the promises we have made to our defined benefit pension holders, while delivering further cash to the business and increasing the future financial and operational options for Costain.”