BP 2015 Annual Report Download - page 149

23. Pensions and other post-retirement benefits – continued
$ million
2013
UK US Eurozone Other Total
Analysis of the amount charged to profit (loss) before interest and taxation
Current service costa497 407 81 96 1,081
Past service cost (22) (49) 26 1 (44)
Settlement – – – (1) (1)
Operating charge relating to defined benefit plans 475 358 107 96 1,036
Payments to defined contribution plans 24 223 9 44 300
Total operating charge 499 581 116 140 1,336
Interest income on plan assetsa(1,139) (240) (63) (67) (1,509)
Interest on plan liabilities 1,223 406 254 106 1,989
Other finance expense 84 166 191 39 480
Analysis of the amount recognized in other comprehensive income
Actual asset return less interest income on plan assets 2,671 730 15 99 3,515
Change in financial assumptions underlying the present value of the plan liabilities 68 1,160 62 213 1,503
Change in demographic assumptions underlying the present value of the plan
liabilities – 14 – (65) (51)
Experience gains and losses arising on the plan liabilities 43 (249) 2 1 (203)
Remeasurements recognized in other comprehensive income 2,782 1,655 79 248 4,764
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 2015, reimbursement balances due from or to other companies in respect of pensions amounted to $377 million reimbursement
assets (2014 $426 million) and $13 million reimbursement liabilities (2014 $16 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 2015 for the group’s plans would have had the effects shown in the table below. The
effects shown for the expense in 2016 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 2016 (416) 387
Effect on pension and other post-retirement benefit obligation at 31 December 2015 (6,897) 8,911
Inflation rateb
Effect on pension and other post-retirement benefit expense in 2016 408 (312)
Effect on pension and other post-retirement benefit obligation at 31 December 2015 6,996 (5,523)
Salary growth
Effect on pension and other post-retirement benefit expense in 2016 112 (99)
Effect on pension and other post-retirement benefit obligation at 31 December 2015 1,135 (1,004)
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.
bThe amounts presented reflect the total impact of an inflation rate change on the assumptions for rate of increase in salaries, pensions in payment and deferred pensions.
One additional year of longevity in the mortality assumptions would increase the 2016 pension and other post-retirement benefit expense by
$60 million and the pension and other post-retirement benefit obligation at 31 December 2015 by $1,329 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 2025 and the weighted
average duration of the defined benefit obligations at 31 December 2015 are as follows:
$ million
Estimated future benefit payments UK US Eurozone Other Total
2016 1,061 966 363 120 2,510
2017 1,098 838 345 117 2,398
2018 1,150 846 337 121 2,454
2019 1,188 839 327 125 2,479
2020 1,210 834 319 127 2,490
2021-2025 6,575 3,966 1,517 667 12,725
years
Weighted average duration 18.2 9.4 14.0 14.0
BP Annual Report and Form 20-F 2015 145
Financial statements