BP’s battle with retired employees over the impact of inflation on their pensions drew the attention of Westminster this week, an escalation in the long-running dispute stemming from the UK’s cost of living crisis.
In a debate around regulations of defined-benefit schemes, which provide a guaranteed level of income during retirement, UK Pension’s Minister Paul Maynard said he would “look closely” into the situation at BP (LON: BP) to “understand fully what has happened and whether the arrangements currently in place in regulation are working as intended.”
About 60,000 BP pensioners have been embroiled in an increasingly public feud since 2022, when BP said it would not use its discretion to boost annual growth in payments to account for soaring inflation.
The company’s defined-benefit plan, which closed to new joiners in 2010, increases pensions annually in line with the UK Retail Price Index up to a maximum of 5% — less than half the rate of inflation in 2022. The plan allows a discretionary increase of as much as 5% above the RPI with BP’s consent, which it has not given.
“This is a matter of basic fairness and one which could affect millions of pensioners across the country if BP’s policies are allowed to spread — that must be challenged,” said Alistair Carmichael, the Liberal Democrat member of parliament for Orkney and Shetland, who brought up the pensioners’ concerns in the Westminster debate.
BP declined to comment on the matter, referring to a statement on its website that explains its rationale for not allowing an increase of more than 5%. The company says it will hold an information session for its pensioners in the new year.
The dispute broke into the open at BP’s annual shareholder meeting in May 2022, when a retired employee questioned former Chief Executive Officer Bernard Looney and then-Chief Financial Officer Murray Auchincloss on BP’s decision not to top up the pension plan’s pot. The pensioners have since taken to social media to press their case, commenting on official BP LinkedIn, Instagram and X posts in large numbers.
I wish Murray well in his new role. However given his record in refusing to engage with @bppensioner this appointment is unlikely to give any hope to all the pensioners who have seen a reduction in their pension value due to @bp_plc current policy
— Dave Hughes (@Davemonic) January 17, 2024
Looney resigned in September after lying to the company’s board about personal relationship with other BP employees. Auchincloss served as interim-CEO until this week, when he was permanently appointed to the position.
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