BP 2008 Annual Report Download - page 199

BP Annual Report and Accounts 2008
Parent company financial statements of BP p.l.c.
5. Creditors
$ million
2008 2007
Within After Within After
1 year 1 year 1 year 1 year
Group undertakings 2,581 – 2,571 –
Accruals and deferred income 74710 44
Dividends 1–1 –
Other 20 33 543 27
2,609 80 3,125 71
The carrying amounts of creditors approximate their fair value.
The profile of the maturity of the financial liabilities included in the balance sheet at 31 December is shown in the table below. These amounts
are included within Creditors – amounts falling due after more than one year, and are denominated in US dollars.
$ million
2008 2007
Due within
1 to 2 years 21 15
2 to 5 years 35 28
More than 5 years 24 28
80 71
6. Pensions
The primary pension arrangement in the UK is a funded final salary pension plan that remains open to new employees. Retired employees draw the
majority of their benefit as an annuity.
The material financial assumptions used for estimating the benefit obligations of the plans are set out below. The assumptions used to evaluate
accrued pension at 31 December in any year are used to determine pension expense for the following year, that is, the assumptions at 31 December
2008 are used to determine the pension liabilities at that date and the pension expense for 2009.
Financial assumptions %
2008 2007 2006
Expected long-term rate of return 7.5 7.4 7.0
Discount rate for plan liabilities 6.3 5.7 5.1
Rate of increase in salaries 4.9 5.1 4.7
Rate of increase for pensions in payment 3.0 3.2 2.8
Rate of increase in deferred pensions 3.0 3.2 2.8
Inflation 3.0 3.2 2.8
In addition to the financial assumptions, we regularly review the demographic and mortality assumptions. The mortality assumption reflects best
practice in the UK, and has been chosen with regard to the latest available published tables adjusted to reflect the experience of the group and an
extrapolation of past longevity improvements into the future. As part of the triannual valuation of our pension plan, our mortality assumption was
reviewed and updated at end-2008 resulting in an increase in the liability of around $800 million.
Mortality assumptions Ye a r s
2008 2007 2006
Life expectancy at age 60 for a male currently aged 60 25.9 24.0 23.9
Life expectancy at age 60 for a male currently aged 40 28.9 25.1 25.0
Life expectancy at age 60 for a female currently aged 60 28.5 26.9 26.8
Life expectancy at age 60 for a female currently aged 40 31.4 27.9 27.8
The market values of the various categories of asset held by the pension plan at 31 December are set out below.
The market value of pension assets at the end of 2008 is lower compared with 2007 due to a fall in the market value of investments when
expressed in their local currencies and a reduction in value that arises from changes in exchange rates (reducing the reported value of investments on
consolidation when expressed in US dollars). Movements in the value of plan assets during the year are shown in detail on page 199.
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