BP 2009 Annual Report Download - page 165

35. Pensions and other post-retirement benefits continued
BP Annual Report and Accounts 2009
Notes on financial statements
Financial statements
163
The expected long-term rates of return and market values of the various categories of asset held by the defined benefit plans at 31 December are set out
below. The market values shown include the effects of derivative financial instruments. The amounts classified as equities include investments in
companies listed on stock exchanges as well as unlisted investments. The market value of unlisted investments at 31 December 2009 was $2,956 million
(2008 $2,819 million and 2007 $2,491 million). The market value of pension assets at the end of 2009 is higher than at the end of 2008 due to a rise in the
market value of investments when expressed in their local currencies and an increase in value that arises from changes in exchange rates (increasing the
reported value of investments when expressed in US dollars). Movements in the value of plan assets during the year are shown in detail in the table on
page 164.
2009 2008 2007
Expected Expected Expected
long-term long-term long-term
rate of Market rate of Market rate of Market
return value return value return value
% $ million % $ million % $ million
UK pension plans
Equities 8.0 16,945 8.0 13,704 8.0 24,106
Bonds 5.3 3,701 6.1 3,258 4.4 5,279
Property 6.5 1,269 6.5 978 6.5 1,259
Cash 1.1 634 2.9 299 5.6 977
7.3 22,549 7.4 18,239 7.3 31,621
US pension plans
Equities 8.5 4,326 8.5 3,991 8.5 6,610
Bonds 4.8 1,218 3.7 1,247 5.0 1,347
Property 8.0 8 8.0 8 8.0 16
Cash 0.9 271 1.9 131 3.6 72
8.0 5,823 8.0 5,377 8.0 8,045
US other post-retirement benefit plans
Equities 8.5 8 8.5 9 8.5 17
Bonds 4.8 4 3.7 4 5.0 6
7.6 12 7.3 13 7.6 23
Other plans
Equities 8.6 1,091 8.4 799 8.1 1,260
Bonds 4.4 1,651 4.2 1,481 5.0 1,491
Property 6.5 82 6.3 127 5.7 145
Cash 2.0 245 3.1 118 4.2 214
5.9 3,069 5.8 2,525 6.4 3,110
The assumed rate of investment return, discount rate, inflation, US healthcare cost trend rate and the mortality assumptions all have a significant
effect on the amounts reported.
A one-percentage point change in the following assumptions for the group’s plans would have had the effects shown in the table below. The
effects shown for the expense in 2010 include current service cost and interest on plan liabilities.
$ million
One-percentage point
Increase Decrease
Investment return
Effect on pension and other post-retirement benefit expense in 2010 (313) 313
Discount rate
Effect on pension and other post-retirement benefit expense in 2010 (75) 98
Effect on pension and other post-retirement benefit obligation at 31 December 2009 (4,778) 6,084
Inflation rate
Effect on pension and other post-retirement benefit expense in 2010 424 (343)
Effect on pension and other post-retirement benefit obligation at 31 December 2009 4,394 (3,706)
US healthcare cost trend rate
Effect on US other post-retirement benefit expense in 2010 31 (28)
Effect on US other post-retirement obligation at 31 December 2009 339 (304)
One additional year of longevity in the mortality assumptions would have the effects shown in the table below. The effect shown for the expense in
2010 includes current service cost and interest on plan liabilities.
$ million
US other post-
UK US retirement German
pension pension benefit pension
plans plans plans plans
One additional year’s longevity
Effect on pension and other post-retirement benefit expense in 2010 39 5 4 9
Effect on pension and other post-retirement benefit obligation at 31 December 2009 528 90 62 149