The BP Pensioners Group (BPPG) represents some 2,400 UK members (active and deferred) of BP’s UK DB Pension Scheme, which is administered by the BP Pension Trustees Ltd. The BPPG was formed in April 2023.

The BPPG submitted written evidence in May 2023, and provided oral evidence on 18th October 2023. The following provides a summary of the key experiences and concerns of our members and suggestions for the Committee to consider.

Summary of the Issues


  • The BP case is particularly simple: the sponsor company is exceedingly well off, the pension fund is very healthy, and there is a very large surplus – under any measure.
  • We feel that, if BP can act with impunity in what appear to be its plans, this will form a blueprint for many of the ca. 5,000 closed DB pension schemes in the UK considering transferring their liabilities to the insurance industry.
  • And, given the scale of the DB funds in the UK (£1.4tn assets, £440bn accounting surplus) this could well lead to a feeding frenzy by sponsors and the financial services industry, with the beneficial owners being the victims – and after a few years of financial engineering many of these funds failing and being rescued by the Pension Protection Fund/taxpayer.

BP as exemplar:

  • For over 3 decades BP promised that their pensions would rise with the cost of living. Employees accepted lower salaries in exchange and made life-long decisions based upon that promise. The compact has now been broken.
  • Inflation linked discretionary increases above 5% were refused by BP in both 2022 and 2023.
  • Pensioners feel they have been betrayed. The cut in the real value of their pensions, 11% so far, is having real impacts on them, some of whom are now extremely vulnerable. The average BP pension is £18k per annum.
  • Pensioners are worried and distressed. They read in the Financial Times that Trustees/BP are in discussions with insurers. They have no voice in any of this.
  • Pensioners fear that their expectation of inflation-matching discretionary increases will disappear entirely at buy-out, and that BP is re-writing history to limit or remove discretionary payments from the pension benefits package to maximise the surplus and facilitate buy-out – and to then lay claim to any remaining surplus.

Pension fund surpluses:

  • Surplus accounting figures are transient. They can only be realised on wind up, unless expropriated.
  • Pension fund surpluses are reflected in parent company accounts, which provides much needed transparency, but when in surplus also provide a welcome boost to the company’s bottom line. Perversely, this may lead companies to be reluctant to erode any surplus by granting discretionary increases – even when they can be fully funded from the assets of the pension fund.
  • Surpluses, like the assets they form part of, belong to the beneficiaries: they came from sponsor payments in lieu of salary, plus direct payments e.g. Additional Voluntary Contributions made by BP employees, plus investment returns etc. Portraying sponsor payments as a burden to be reversed is disingenuous and self-serving: the employer’s compact with its employees was (and therefore must still be) to maintain the pension fund such that it could sustain the promised pension payments, in return for paying employees less while they were working. To illustrate this, when BP closed the DB Fund to further accrual in 2021, it compensated several thousand current UK DB employees with an uplift in base salary of 20%.
  • Pension Fund assets, and so the surpluses, are held in trust for the beneficiaries by Pension Funds. On wind-up, Trustees must look to the Deed and Rules for guidance on the disposition of any surplus. In the case of the BP Fund, the Deed and Rules guide Trustees to use the surplus to first secure member benefits, then consider augmenting member benefits and then any residual surplus may be returned to the sponsor. But the Deed also requires the consent of the Sponsor to such dispositions. The conflict of interest is readily apparent particularly when surpluses are large. For UK DB schemes where the Deed and Rules are silent or unclear, the potential for conflicts of interest are even greater. Trustees will find themselves in an invidious position.
  • Absent clear guidance from the Deed and Rules, sponsors and beneficiaries must agree how they should be allocated fairly on wind up in the interests of both – if, say, on the day of wind-up there are more assets than required to honour the promised pensions. Clearly it is totally unacceptable for the promised pension payments to be pared-back to advantage the sponsor.
  • As further context to BP’s refusal of any discretionary increase (so preserving the surplus of £5 billion): BP has gone on record as having more cash than it knows what to do with; the rise in oil and gas prices has generated record profits for BP alongside record losses for pensioners, and BP itself would not have had to contribute towards paying the discretionary increase recommended to it by the Pension Fund Trustees. Furthermore, the BP excuse that pensions payments from this UK-based ring-fenced fund must be held back in the interests of other corporate stakeholders is absurd and outrageous.


  • A majority of Trustee Directors of the BP Fund are potentially conflicted. Many are paid according to the success of BP and not the Fund and its beneficiaries. Unlike their predecessors, a significant number have no balancing beneficial interest in the Fund.
  • The Fund is on record as saying that it aims to maximise shareholder value (see BP Trustees Ltd Annual Report and Financial Statement 2022, available online from Companies House). BP is its only shareholder.
  • Member nominated Trustees are in the minority, are not elected but appointed following interview by the Trustee (only having to secure 10 member nominations), and have no mechanism themselves with which to communicate or consult the wider membership that is independent of the wider Trustee Board and its executive.

We are concerned that if these issues can arise in relation to BP’s UK Defined Benefit Pensions, it can happen to other DB schemes. We hope that our experience and concerns provide a useful exemplar for the committee to consider.


Key requests of the Committee and Government

  1. A requirement that a majority of Trustee Board members should be demonstrably independent of the parent company/organisation.
  2. New measures to safeguard discretionary increases including a requirement to replicate promises made to pensioners (perhaps equivalent to mis-selling protections elsewhere in legislation).
  3. New measures to ensure equity and fairness when it comes to decisions about who is to benefit from any surplus at wind up of the pension scheme (e.g. at Buy-Out by an insurer).
  4. New measures that allow pension scheme members choices at the time of Buy-Out, for example to transfer to the insurer, to transfer to an alternative provider (such as a draw-down pension) or to take a taxable cash lump sum.