BP 2014 Annual Report Download - page 145

22. Pensions and other post-retirement benefits – continued
$ million
2012
UK US Eurozone Other Total
Analysis of the amount charged to profit before interest and taxation
Current service costa477 379 55 96 1,007
Past service cost (1) 20 84 (2) 101
Settlement – – 4 (3) 1
Operating charge relating to defined benefit plans 476 399 143 91 1,109
Payments to defined contribution plans 14 223 6 38 281
Total operating charge 490 622 149 129 1,390
Interest income on plan assetsa(1,146) (304) (71) (83) (1,604)
Interest on plan liabilities 1,250 516 282 122 2,170
Other finance expense 104 212 211 39 566
Analysis of the amount recognized in other comprehensive income
Actual asset return less interest income on plan assets 1,523 718 107 66 2,414
Change in financial assumptions underlying the present value of the plan liabilities (1,476) (1,240) (1,037) (26) (3,779)
Change in demographic assumptions underlying the present value of the plan
liabilities – 52 (12) (25) 15
Experience gains and losses arising on the plan liabilities (118) 20 (101) (23) (222)
Remeasurements recognized in other comprehensive income (71) (450) (1,043) (8) (1,572)
aThe costs of managing plan investments are offset against the investment return, the costs of administering pension plan benefits are generally included in current service cost and the costs of
administering other post-retirement benefit plans are included in the benefit obligation.
At 31 December 2014, reimbursement balances due from or to other companies in respect of pensions amounted to $426 million reimbursement
assets (2013 $399 million) and $16 million reimbursement liabilities (2013 $15 million). These balances are not included as part of the pension
surpluses and deficits, but are reflected within other receivables and other payables in the group balance sheet.
Sensitivity analysis
The discount rate, inflation, salary growth and the mortality assumptions all have a significant effect on the amounts reported. A one-percentage point
change, in isolation, in certain assumptions as at 31 December 2014 for the group’s plans would have had the effects shown in the table below. The
effects shown for the expense in 2015 comprise the total of current service cost and net finance income or expense.
$ million
One percentage point
Increase Decrease
Discount ratea
Effect on pension and other post-retirement benefit expense in 2015 (499) 487
Effect on pension and other post-retirement benefit obligation at 31 December 2014 (8,174) 10,632
Inflation rate
Effect on pension and other post-retirement benefit expense in 2015 543 (406)
Effect on pension and other post-retirement benefit obligation at 31 December 2014 8,264 (6,531)
Salary growth
Effect on pension and other post-retirement benefit expense in 2015 157 (139)
Effect on pension and other post-retirement benefit obligation at 31 December 2014 1,103 (1,080)
aThe amounts presented reflect that the discount rate is used to determine the asset interest income as well as the interest cost on the obligation.
One additional year of longevity in the mortality assumptions would increase the 2015 pension and other post-retirement benefit expense by $74
million and the pension and other post-retirement benefit obligation at 31 December 2014 by $1,582 million.
Estimated future benefit payments and the weighted average duration of defined benefit obligations
The expected benefit payments, which reflect expected future service, as appropriate, but exclude plan expenses, up until 2024 and the weighted
average duration of the defined benefit obligations at 31 December 2014 are as follows:
$ million
Estimated future benefit payments UK US Eurozone Other Total
2015 1,192 899 439 136 2,666
2016 1,248 917 421 134 2,720
2017 1,256 923 412 139 2,730
2018 1,329 921 400 146 2,796
2019 1,377 916 389 151 2,833
2020-2024 7,156 4,343 1,848 791 14,138
years
Weighted average duration 19.0 9.8 14.5 14.2
Financial statements
BP Annual Report and Form 20-F 2014 141