Pensions Minister agrees to look into BP issue.

In a Parliamentary debate in Westminster Hall today , Alistair Carmichael, MP (Orkney & Shetland) told UK Pension’s Minister Paul Maynard that BP appeared to be “dealing from the bottom of the deck” when it came to pension decisions made by its leaders which have reduced the value of the pension paid by 11% in real terms in just two years.

The MP said BP was seeking to “play-off” pensioners and employees in trying to justify its decisions and called on BP’s new leadership “to spend time talking to their pensioners in a serious and meaningful way which frankly they have failed to do thus far.”

Carmichael warned that the BP issue was the equivalent of a “canary in a coalmine” for Defined Benefit pensions in the UK. “What happens to them can happen to others – that’s why this is a matter to which the government must now turn its close urgent attention.” Other MPs intervened in the debate to express similar concerns raised by constituents.

In response, Maynard said: “Having listened, I will look closely again at the situation regarding the pension schemes I have heard about today to understand fully what has happened and whether the arrangements currently in place in regulation are working as intended. “

BP recently said it would boost its charity – formerly the BP benevolent Fund – and help some of its UK pensioners with means-tested one-off payments. However, Carmichael told the Minister: “Pensions aren’t charitable handouts. This is money that people have earned in the course of their working lives.”

Speaking on behalf of the BP Pensioner Group, Mike Slingsby said:

“We are grateful to Mr Carmichael and fellow MPs for hosting this important debate – and we’re encouraged by the response of the Minister.

“Today has seen the appointment of Murray Auchincloss as BP’s new CEO. We urge him to show real leadership in line with the Company’s values by revisiting the decisions made over the past two years that have caused such great anxiety and financial impacts on thousands of his UK pensioners – a significant number of whom are in their 80s and 90s.

“As the only group representing the interests of BP’s pensioners – we stand ready to work with Mr Auchincloss to bring this wholly unnecessary dispute to a close.”

Notes to Editors

  • The BP Pension Fund has c.58,000 members of whom 16,000 are over the age of 80. The average annual pension paid is c.£18,000 pa.
  • For some 30 years, BP and the Trustees have given written and verbal assurances that their policy is to “increase pensions fully in line with cost-of-living increases wherever possible and provided the Fund has sufficient resources.”
  • Thousands of BP employees invested their own money into the Fund with that assurance. The Fund currently has a very strong surplus of £5 billion.
  • In the past two years, BP and the Trustees have failed to follow the policy of increasing pensions in line with the cost of living leading to a permanent 11% reduction in the value of BP pensions in real terms.
  • The BP Pension Fund trustee recently admitted that it was in talks with insurance companies inviting them to ‘buy-in’ to the Fund. Buy-In arrangements are invariably the first step leading to a complete sell off of pension funds to insurance companies.