BP 2015 Annual Report Download - page 208

6. Pensions – continued
$ million
2015 2014
Movements in benefit obligation during the year
Benefit obligation at 1 January 32,357 30,496
Exchange adjustment (1,446) (1,989)
Operating charge relating to defined benefit plans 497 494
Interest cost 1,144 1,375
Contributions by plan participantsa32 39
Benefit payments (funded plans)b(1,269) (1,231)
Benefit payments (unfunded plans)b(6) (8)
Remeasurements (2,375) 3,181
Benefit obligation at 31 December 28,934 32,357
Movements in fair value of plan assets during the year
Fair value of plan assets at 1 January 31,773 31,516
Exchange adjustment (1,506) (1,958)
Interest income on plan assetsc1,124 1,425
Contributions by plan participantsa32 39
Contributions by employers (funded plans) 754 713
Benefit payments (funded plans)b(1,269) (1,231)
Remeasurementsc315 1,269
Fair value of plan assets at 31 Decemberde 31,223 31,773
Surplus (deficit) at 31 December 2,289 (584)
Represented by
Asset recognized 2,516 15
Liability recognized (227) (599)
2,289 (584)
The surplus (deficit) may be analysed between funded and unfunded plans as follows
Funded 2,506 (310)
Unfunded (217) (274)
2,289 (584)
The defined benefit obligation may be analysed between funded and unfunded plans as follows
Funded (28,717) (32,083)
Unfunded (217) (274)
(28,934) (32,357)
aMost of the contributions made by plan participants were made under salary sacrifice.
bThe benefit payments amount shown above comprises $1,253 million benefits plus $22 million of plan expenses incurred in the administration of the benefit.
cThe actual return on plan assets is made up of the sum of the interest income on plan assets and the remeasurement of plan assets as disclosed above.
dReflects $31,030 million of assets held in the BP Pension Fund (2014 $31,600 million) and $147million held in the BP Global Pension Trust (2014 $134 million), with $37 million representing the
company’s share of Merchant Navy Officers Pension Fund (2014 $39 million) and $9 million of Merchant Navy Ratings Pension Fund (2014 $nil).
eThe fair value of plan assets includes borrowings related to the LDI programme as described on page 202.
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 company’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 (328) 307
Effect on pension and other post-retirement benefit obligation at 31 December 2015 (4,651) 6,027
Inflation rateb
Effect on pension and other post-retirement benefit expense in 2016 334 (253)
Effect on pension and other post-retirement benefit obligation at 31 December 2015 5,802 (4,543)
Salary growth
Effect on pension and other post-retirement benefit expense in 2016 78 (68)
Effect on pension and other post-retirement benefit obligation at 31 December 2015 813 (729)
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 $40
million and the pension and other post-retirement benefit obligation at 31 December 2015 by $861 million.
The parent company financial statements of BP p.l.c. on pages 196-213 do not form part of BP’s Annual Report on Form 20-F as filed with the SEC.
204 BP Annual Report and Form 20-F 2015