“Moral bankruptcy” at the heart of company’s approach to pensioners

In a Parliamentary debate on UK pensions in the House of Commons on 2 May 2024, Alistair Carmichael, Liberal Democrat MP (Orkney & Shetland) told the House there appeared to be a “moral bankruptcy” at the heart of corporate BP when it came
to pensioners.

He also criticised the Company’s ‘zero engagement’ policy with the BP Pensioner Group which represents some 3,000 members of the UK BP Pension Fund. The Pensioner Group has been seeking a meeting with company leaders for more than a year.

This followed decisions by BP’s new CEO (former CFO) Murray Auchincloss to block pension increases recommended by the Fund Trustee at a time of exceptional inflation even though the Pension Fund has a record £5 billion surplus and BP enjoyed record windfall profits and executive pay. The decisions have led to an 11% fall in the value of pensions paid.

Labour’s Shadow Minister for Work and Pensions, Vicky Foxcroft, told the House: “I am sure nobody here could fail to be moved by the words of the dying BP pensioner who was told that his widow will no longer be protected from inflation, despite previous assurances. Pensions are, after all, not only an income while we are alive. They are also a way of providing for loved ones after we are gone.”
The Shadow Minister went on to say that a Labour Government would undertake a wide-ranging review of pensions.

Carmichael warned Pensions Minister Paul Maynard that a new world was developing in UK defined benefit pensions and: “We will look back in years to come, and we will see that the cases of BP, Shell, Exxon Mobil, Hewlett-Packard and others are the ‘canaries in the coalmine’”.

Criticising the actions of corporate leaders he told the House: “They don’t seem to understand that they are the inheritors of businesses built by others including the pension beneficiaries. I think Madam Deputy Speaker, if one is to stand on the shoulders of others then it is always good to respect that you only enjoy the view you have because of the shoulders on which you stand.”

Sir Stephen Timms, MP and Chair of the Work & Pensions Select Committee told the House, in response to concerns that pension scandals take far too long to resolve: “We need to find ways to speed up some of these processes, because the victims in these cases have their lives really blighted. We are allowing that blight to last for years and years, and that needs to change.”

In closing the debate, Carmichael said “The people who run these companies should understand that we are watching what they are doing, that they have an obligation to treat their former workers and their pensioners fairly and that, if they do not have it within themselves to do that, we in Parliament and in Government will make sure that they have to.”

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. £17,000 pa.

▪ For some 30 years, BP and the Trustees have given written and verbal assurances that their policy is to “increase pensions 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 three 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.