BP 2008 Annual Report Download - page 162

Financial statements
BP Annual Report and Accounts 2008
Notes on financial statements
38. Pensions and other post-retirement benefits continued
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 2008 was
$2,819 million (2007 $2,491 million and 2006 $1,506 million). The market value of pension assets at the end of 2008 is lower than at the end of 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 when expressed in US dollars). Movements in the value of plan assets during the year are shown in
detail in the table on page 162.
2008 2007 2006
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 13,704 8.0 24,106 7.5 23,631
Bonds 6.1 3,258 4.4 5,279 4.7 3,881
Property 6.5 978 6.5 1,259 6.5 1,370
Cash 2.9 299 5.6 977 3.8 379
7.4 18,239 7.3 31,621 7.0 29,261
US pension plans
Equities 8.5 3,991 8.5 6,610 8.5 6,528
Bonds 3.7 1,247 5.0 1,347 5.0 1,371
Property 8.0 8 8.0 16 8.0 15
Cash 1.9 131 3.6 72 3.2 41
8.0 5,377 8.0 8,045 8.0 7,955
US other post-retirement benefit plans
Equities 8.5 9 8.5 17 8.5 19
Bonds 3.7 4 5.0 6 5.0 7
7.3 13 7.6 23 7.5 26
Other plans
Equities 8.4 799 8.1 1,260 7.6 1,158
Bonds 4.2 1,481 5.0 1,491 4.6 1,199
Property 6.3 127 5.7 145 4.7 120
Cash 3.1 118 4.2 214 3.0 191
5.8 2,525 6.4 3,110 5.8 2,668
The assumed rate of investment return, discount rate, inflation and the assumed US healthcare cost trend rate all have a significant effect on the
amounts reported. A one-percentage point change in these assumptions for the group’s plans would have had the following effects:
$ million
One-percentage point
Increase Decrease
Investment return
Effect on pension and other post-retirement benefit expense in 2009 (256) 258
Discount rate
Effect on pension and other post-retirement benefit expense in 2009 (88) 129
Effect on pension and other post-retirement benefit obligation at 31 December 2008 (3,783) 4,818
Inflation rate
Effect on pension and other post-retirement benefit expense in 2009 375 (286)
Effect on pension and other post-retirement benefit obligation at 31 December 2008 3,407 (2,783)
US healthcare cost trend rate
Effect on US other post-retirement benefit expense in 2009 29 (23)
Effect on US other post-retirement obligation at 31 December 2008 335 (277)
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