Information session for members of the BP Pension Fund

In the UK, the rising cost of living has created real challenges for many people – including bp retirees. We continue to listen to concerns. Yesterday some of bp’s most senior leaders held an Information Session for members of the BP Pension Fund about specific concerns relating to the UK bp pension scheme. This is a short overview of what was discussed.

How the BP Pension Scheme works

• Pensions in the scheme increase each year in-line with the retail price index (RPI) to a cap of 5%. In May 2022 and 2023, pensioners received that guaranteed 5% increase.
• Some pensioners noted that bp had supported additional discretionary increases in the 1990s and early 2000s. However, in 2007 the Trustee of the BP Pension Fund informed pensioners that they should ordinarily expect increases to follow RPI, subject to a cap of 5% a year. 
• In 2023 the Trustee asked bp for a discretionary increase of an additional 4% (making a total of 9%). 
• bp considered this carefully but, having considered a number of factors, ultimately did not agree to the additional increase. One of those factors was that, as a global company, bp did not think it was appropriate to provide additional increases (i.e. above 5%) for UK pensioners and not to others around the world, when everyone was experiencing inflation.
  

Cumulative increases in the scheme

• The BP Pension Scheme’s guaranteed increases have been among the highest provided by UK private sector company pension schemes. bp reviewed what other UK companies were doing and did not find any that had consented to a discretionary increase above 5%.
• And since 2011 when civil service pension schemes first started using the Consumer Price Index, increases in the BP Pension Scheme have overall outpaced average earnings and CPI inflation.
  

BP Pension Fund surplus

• The current surplus in the BP Pension Fund exists because of regular funding from bp (contributing £3.8bn to the scheme since it closed to new hires in 2010) and prudent long term investment management by the Trustee.
• The surplus provides an additional layer of protection for members’ benefits through ups and downs of the UK and global economic cycles. It is predicted that pensions will be payable under the fund until 2080 and beyond.

• Some pensioners requested an 11% discretionary increase so that their pensions will have increased fully in line with RPI over the last couple of years. They also want bp to commit to future increases in line with RPI if it ever goes above 5% in the future.

• The 11% increase would cost bp £2 billion or more – no one knows what inflation will be through to 2080. That is unaffordable and could potentially undermine the security that the surplus provides through future economic downturns.

bp Helios Fund

• We’re committed to supporting those pensioners most in need. 
• We have given funds to the bp Helios Fund and to the Retail Trust, a body that supports those who worked in the retail sector.
• This will help those bodies provide a one-off cost-of-living payment of £2,500 to eligible pensioners.
• Around 4,000 pensioners have applied to date, that’s a little under 10% of our UK pensioners

Notes

• In November 2023, bp released a previous statement on UK pension concerns.
• The Trustee, at bp’s request, issued the invites to the information session to all pensioners, dependents and deferred pensioners, but the Trustee was not involved with the information session.