Amidst the ongoing challenges posed by the rising cost of living, BP retirees globally, particularly those in the UK, have received disappointing news regarding their pensions. The BP Pension Scheme, part of the BP Pension Fund (BPPF), typically guarantees annual increases in line with the retail price index (RPI) up to a cap of 5%. However, this year, despite a request from the Trustee for a discretionary increase of 2%, the company has decided not to consent to the request.
The proposed 2% discretionary increase would have amounted to a total annual increase of 7% for affected pensioners when combined with the guaranteed increase under the Scheme rules. This decision comes against the backdrop of significant increases in the cost of living and economic uncertainties.
In justifying its decision, BP cited a range of factors, including the current cost of living, the funding position of the BPPF, and the broader economic impact on the company. Notably, the company highlighted that the guaranteed 5% increase already exceeds salary increases awarded to UK employees and is close to the December 2023 RPI figure. Moreover, BP emphasized its history of providing pension increases exceeding the consumer price index (CPI) over the past decade.
However, it’s worth noting that BP had previously allocated additional funds to the bp Helios Fund to support pensioners on lower incomes, with over 6,500 pensioners benefiting from a one-off £2,500 grant. While the deadline for this scheme has closed, BP has expressed its commitment to working with the trustee of the bp Helios Fund to provide further support in 2024.
This decision follows an earlier Information Session held by BP’s senior leaders for members of the BP Pension Fund, shedding light on the reasons behind the lack of pension increases in 2022 and 2023. Some of the factors discussed during the session are pertinent to BP’s decision not to award a discretionary increase in 2024.
The rejection of the pension increase request underscores the challenges faced by retirees amidst the current economic climate and raises questions about the broader impact on pensioners’ financial well-being.
