The report resets the UK pension debate by reminding employers and trustees that the interests of pension scheme members are paramount.

The BP Pensioner Group – representing 2,800 members of the BP Defined Benefit Pension Scheme – strongly welcomed the findings of Parliament’s Work & Pensions Select Committee Report published today.

Among recommendations, the report calls on the Government and The Pensions Regulator (TPR) to consider ways of ensuring the reasonable expectations of scheme members for benefit enhancement are met where there has been a history of discretionary increases.

This is at the core of a number of emerging disputes involving UK pension funds – including the BP pension scheme – where BP has imposed an 11% cut in the value of pensions paid over the past two years despite the Fund being in record surplus and BP enjoying record profits and its executives being awarded record pay rises.

The Select Committee also noted in respect to the governance of DB schemes that: “The TPR and Ministers confirmed their view that the interests of scheme members should remain paramount, and decisions should be made by trustees in line with their fiduciary duties.”

BP Pensioner Group spokesman, Mike Slingsby said:

“We strongly welcome and endorse the findings of the Select Committee Inquiry.  The Committee and its report have reset the debate about the UK’s Defined Benefit pensions by reminding employers and trustees that the interests of the pension scheme member remainparamount.   This requires that there is an active, robust conversation and challenge between trustees and sponsors in terms of making sure that members get the right benefit and that any conflicts of interest are appropriately recognised and addressed.

“In the case of the BP Pension Fund, recent decisions by BP and the Pension Fund Trustee appear to have lost sight of this fundamental fiduciary duty.   The failure to maintain the value of pensions paid over the past two years – in complete disregard to a long-standing policy and practice of discretionary increases – is unacceptable and is now under legal challenge.  Pensioners should not have to resort to the Courts at this stage of their lives – and we hope that this Report encourages BP and the Trustee to see sense.

“We thank Sir Stephen Timms, MP and his Committee members for their diligence in undertaking this important inquiry and ensuring the voice of UK pensioners can be properly heard.”

Notes to Editors

  • The BP Pension Fund has c. 59,000 members of whom 14,000 are over the age of 80. The average annual pension paid is c. £16,700 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.”   During that period, whenever inflation (RPI) has increased above 5%, discretionary increases were awarded fully in line with inflation.
  • Thousands of BP employees invested their own money into the Fund with that assurance. The Fund currently has a very strong surplus of £5.1 billion.
  • In 2022 and 2023, BP acted to block the recommendations of the Trustee to award discretionary increases leading to an 11% fall in the real value of the pension.
  • 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.
  • BP has claimed that 100% of the surplus, well over actuarial forecasts, is needed to assure member benefits to 2080, but has also booked the £5.1 billion pension fund surplus as a Company asset on its books.