Pensions and other post-retirement benefits (Tables)

12 Months Ended

Dec. 31, 2021

Employee Benefits [Abstract]

Disclosure of defined benefit plans

The assumptions are reviewed by management at the end of each year and are used to evaluate the accrued benefit obligation at 31 December and pension expense for the following year.

									%
Financial assumptions used to determine benefit obligationa			UK			US			Eurozone
	2021	2020	2019	2021	2020	2019	2021	2020	2019
Discount rate for plan liabilities	1.8	1.4	2.1	2.7	2.2	3.1	1.3	1.0	1.3
Rate of increase for pensions in payment	3.2	2.8	2.7	—	—	—	1.4	1.3	1.5
Rate of increase in deferred pensions	3.2	2.8	2.7	—	—	—	0.4	0.5	0.5
Inflation for plan liabilities	3.3	2.9	2.7	2.1	1.7	1.5	1.6	1.5	1.7
									%
Financial assumptions used to determine benefit expense			UK			US			Eurozone
	2021	2020	2019	2021	2020	2019	2021	2020	2019
Discount rate for plan service cost	1.5	2.1	3.0	2.4	3.2	4.2	1.4	1.8	2.5
Discount rate for plan other finance expenseb	1.7	2.1	2.9	2.2	3.1	4.1	1.0	1.3	2.0
Inflation for plan service cost	2.8	2.6	3.1	1.7	1.5	1.5	1.5	1.7	1.7

a    Salary growth is no longer a material financial assumption for the Group following the closure of the primary pension plan to future accrual. The rate of increase in salaries for the UK was 3.6% and 3.4% in 2020 and 2019 respectively.

b The discount rate for plan other finance expense was 1.4% for the primary UK plan for the period before the plan closed to future accrual on 30th June 2021 and 1.9% thereafter.

bp’s most substantial pension liabilities are in the UK, the US and the Eurozone where our mortality assumptions are as follows:

									Years
Mortality assumptions			UK			US			Eurozone
	2021	2020	2019	2021	2020	2019	2021	2020	2019
Life expectancy at age 60 for a male currently aged 60	26.9	26.9	27.3	24.9	24.7	24.9	25.8	25.7	25.7
Life expectancy at age 60 for a male currently aged 40	28.4	28.4	28.9	26.6	26.4	26.7	28.3	28.2	28.3
Life expectancy at age 60 for a female currently aged 60	28.9	28.8	28.7	27.9	27.7	28.0	29.1	29.0	29.1
Life expectancy at age 60 for a female currently aged 40	30.5	30.4	30.5	29.4	29.2	29.7	31.2	31.2	31.2

Disclosure of fair value of plan assets

The current asset allocation policy for the major plans at 31 December 2021 was as follows:

	UK	US
Asset category	%	%
Total equity (including private equity)	12	27
Bonds/cash (including LDI)	81	73
Property/real estate	7	—

The fair values of the various categories of assets held by the defined benefit plans at 31 December are presented in the table below, including the effects of derivative financial instruments. Movements in the fair value of plan assets during the year are shown in detail in the table on page 223.

23. Pensions and other post-retirement benefits – continued

					$ million
	UKa	USb	Eurozone	Other	Total
Fair value of pension plan assets
At 31 December 2021
Listed equities – developed markets	2,964	340	473	290	4,067
– emerging markets	252	45	67	76	440
Private equityc	3,233	1,537	—	3	4,773
Government issued nominal bondsd	7,491	2,606	974	432	11,503
Government issued index-linked bondsd	24,516	—	100	—	24,616
Corporate bondsd	10,128	2,475	689	498	13,790
Propertye	2,714	—	110	22	2,846
Cash	1,136	116	54	69	1,375
Other	1,133	54	70	22	1,279
Debt (repurchase agreements) used to fund liability driven investments	(10,723)	—	—	—	(10,723)
	42,844	7,173	2,537	1,412	53,966
At 31 December 2020
Listed equities – developed markets	5,008	1,112	542	318	6,980
– emerging markets	418	115	68	70	671
Private equityc	2,899	1,604	—	4	4,507
Government issued nominal bondsd	4,303	1,839	1,111	616	7,869
Government issued index-linked bondsd	24,576	—	107	—	24,683
Corporate bondsd	8,906	2,398	587	279	12,170
Propertye	2,553	—	110	28	2,691
Cash	1,392	267	51	163	1,873
Other	795	131	104	30	1,060
Debt (repurchase agreements) used to fund liability driven investments	(9,387)	—	—	—	(9,387)
	41,463	7,466	2,680	1,508	53,117
At 31 December 2019
Listed equities – developed markets	6,285	1,290	495	371	8,441
– emerging markets	1,096	124	61	64	1,345
Private equityc	2,675	1,474	—	3	4,152
Government issued nominal bondsd	4,884	2,100	959	572	8,515
Government issued index-linked bondsd	19,462	—	100	—	19,562
Corporate bondsd	6,132	2,304	569	256	9,261
Propertye	2,507	—	96	27	2,630
Cash	426	289	33	93	841
Other	98	74	30	26	228
Debt (repurchase agreements) used to fund liability driven investments	(7,436)	—	—	—	(7,436)
	36,129	7,655	2,343	1,412	47,539

a    Bonds held by the UK pension plans are denominated in sterling. Property held by the UK pension plans is in the United Kingdom.

b    Bonds held by the US pension plans are denominated in US dollars.

c Private equity is valued at fair value based on the most recent transaction price or third-party net asset, revenue or earnings based valuations that generally result in the use of significant unobservable inputs.

d Bonds held by pension plans are valued using quoted prices in active markets.

e Properties are valued based on an analysis of recent market transactions supported by market knowledge derived from third-party professional valuers that generally result in the use of significant unobservable inputs.

Disclosure of net defined benefit liability (asset)

					$ million
					2021
	UK	US	Eurozone	Other	Total
Analysis of the amount charged to profit or loss
Current service costa	154	246	105	31	536
Past service costb	(302)	—	(27)	2	(327)
Settlementb	—	—	(4)	(1)	(5)
Operating charge (credit) relating to defined benefit plans	(148)	246	74	32	204
Payments to defined contribution plans	76	136	7	36	255
Total operating charge (credit)	(72)	382	81	68	459
Interest income on plan assetsa	(684)	(150)	(30)	(40)	(904)
Interest on plan liabilities	559	209	78	56	902
Other finance (income) expense	(125)	59	48	16	(2)
Analysis of the amount recognized in other comprehensive income
Actual asset return less interest income on plan assets	2,440	749	12	25	3,226
Change in financial assumptions underlying the present value of the plan liabilities	(100)	777	233	97	1,007
Change in demographic assumptions underlying the present value of the plan liabilities	66	(41)	(15)	1	11
Experience gains and losses arising on the plan liabilities	7	173	(11)	3	172
Remeasurements recognized in other comprehensive income	2,413	1,658	219	126	4,416
Movements in benefit obligation during the year
Benefit obligation at 1 January	34,171	10,187	8,161	1,895	54,414
Exchange adjustments	(255)	—	(623)	(51)	(929)
Operating charge relating to defined benefit plans	(148)	246	74	32	204
Interest cost	559	209	78	56	902
Contributions by plan participantsc	18	—	2	6	26
Benefit payments (funded plans)d	(1,530)	(1,192)	(87)	(164)	(2,973)
Benefit payments (unfunded plans)d	(8)	(268)	(288)	(21)	(585)
Disposals	—	—	(2)	—	(2)
Remeasurements	27	(909)	(207)	(101)	(1,190)
Benefit obligation at 31 Decembera e	32,834	8,273	7,108	1,652	49,867
Movements in fair value of plan assets during the year
Fair value of plan assets at 1 January	41,463	7,466	2,680	1,508	53,117
Exchange adjustments	(365)	—	(214)	(28)	(607)
Interest income on plan assetsa f	684	150	30	40	904
Contributions by plan participantsc	18	—	2	6	26
Contributions by employers (funded plans)	134	—	115	25	274
Benefit payments (funded plans)d	(1,530)	(1,192)	(87)	(164)	(2,973)
Disposals	—	—	(1)	—	(1)
Remeasurementsf	2,440	749	12	25	3,226
Fair value of plan assets at 31 Decemberg	42,844	7,173	2,537	1,412	53,966
Surplus (deficit) at 31 December	10,010	(1,100)	(4,571)	(240)	4,099
Represented by
Asset recognized	10,280	1,410	155	74	11,919
Liability recognized	(270)	(2,510)	(4,726)	(314)	(7,820)
	10,010	(1,100)	(4,571)	(240)	4,099
The surplus (deficit) may be analysed between funded and unfunded plans as follows
Funded	10,280	1,410	94	30	11,814
Unfunded	(270)	(2,510)	(4,665)	(270)	(7,715)
	10,010	(1,100)	(4,571)	(240)	4,099
The defined benefit obligation may be analysed between funded and unfunded plans as follows
Funded	(32,564)	(5,763)	(2,443)	(1,382)	(42,152)
Unfunded	(270)	(2,510)	(4,665)	(270)	(7,715)
	(32,834)	(8,273)	(7,108)	(1,652)	(49,867)

a    The 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.

b    The past service credit in the UK represents curtailment gains arising from the closure of the primary pension plan in the UK to future accrual. Past service credits and settlements in the Eurozone include $18 million of curtailments and settlements due to restructuring initiatives. Remaining past service cost and settlements represent charges for special termination benefits reflecting the increased liability arising as a result of early retirements.

c Most of the contributions made by plan participants into UK pension plans were made under salary sacrifice.

d The benefit payments amount shown above comprises $3,416 million benefits and $93 million settlements, plus $49 million of plan expenses incurred in the administration of the benefit.

e    The benefit obligation for the US is made up of $6,164 million for pension liabilities and $2,109 million for other post-retirement benefit liabilities (which are unfunded and are primarily retiree medical liabilities). The benefit obligation for the Eurozone includes $4,405 million for pension liabilities in Germany which is largely unfunded.

f The 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.

g The fair value of plan assets includes borrowings related to the LDI programme as described on page 221.

23. Pensions and other post-retirement benefits – continued

					$ million
					2020
	UK	US	Eurozone	Other	Total
Analysis of the amount charged to profit or loss
Current service costa	250	292	103	38	683
Past service costb	(48)	(66)	12	(20)	(122)
Settlementb	—	(23)	10	(1)	(14)
Operating charge relating to defined benefit plans	202	203	125	17	547
Payments to defined contribution plans	49	183	2	38	272
Total operating charge	251	386	127	55	819
Interest income on plan assetsa	(725)	(210)	(33)	(40)	(1,008)
Interest on plan liabilities	596	289	97	59	1,041
Other finance (income) expense	(129)	79	64	19	33
Analysis of the amount recognized in other comprehensive income
Actual asset return less interest income on plan assets	4,108	1,041	104	38	5,291
Change in financial assumptions underlying the present value of the plan liabilities	(4,207)	(1,178)	(143)	(42)	(5,570)
Change in demographic assumptions underlying the present value of the plan liabilities	585	29	56	(4)	666
Experience gains and losses arising on the plan liabilities	54	(101)	(178)	8	(217)
Remeasurements recognized in other comprehensive income	540	(209)	(161)	—	170
Movements in benefit obligation during the year
Benefit obligation at 1 January	29,780	10,119	7,353	1,826	49,078
Exchange adjustments	1,303	—	720	64	2,087
Operating charge relating to defined benefit plans	202	203	125	17	547
Interest cost	596	289	97	59	1,041
Contributions by plan participantsc	21	—	2	11	34
Benefit payments (funded plans)d	(1,291)	(1,441)	(81)	(86)	(2,899)
Benefit payments (unfunded plans)d	(8)	(197)	(265)	(34)	(504)
Reclassified as assets held for sale	—	(1)	(55)	—	(56)
Disposals	—	(35)	—	—	(35)
Remeasurements	3,568	1,250	265	38	5,121
Benefit obligation at 31 Decembera e	34,171	10,187	8,161	1,895	54,414
Movements in fair value of plan assets during the year
Fair value of plan assets at 1 January	36,129	7,655	2,343	1,412	47,539
Exchange adjustments	1,582	—	235	64	1,881
Interest income on plan assetsa f	725	210	33	40	1,008
Contributions by plan participantsc	21	—	2	11	34
Contributions by employers (funded plans)	189	8	99	29	325
Benefit payments (funded plans)d	(1,291)	(1,441)	(81)	(86)	(2,899)
Reclassified as assets held for sale	—	(7)	(55)	—	(62)
Remeasurementsf	4,108	1,041	104	38	5,291
Fair value of plan assets at 31 Decemberg	41,463	7,466	2,680	1,508	53,117
Surplus (deficit) at 31 December	7,292	(2,721)	(5,481)	(387)	(1,297)
Represented by
Asset recognized	7,567	269	59	62	7,957
Liability recognized	(275)	(2,990)	(5,540)	(449)	(9,254)
	7,292	(2,721)	(5,481)	(387)	(1,297)
The surplus (deficit) may be analysed between funded and unfunded plans as follows
Funded	7,564	269	(109)	(58)	7,666
Unfunded	(272)	(2,990)	(5,372)	(329)	(8,963)
	7,292	(2,721)	(5,481)	(387)	(1,297)
The defined benefit obligation may be analysed between funded and unfunded plans as follows
Funded	(33,899)	(7,197)	(2,789)	(1,566)	(45,451)
Unfunded	(272)	(2,990)	(5,372)	(329)	(8,963)
	(34,171)	(10,187)	(8,161)	(1,895)	(54,414)

a    The 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.

b    Past service credits represent curtailment gains arising from restructuring programmes in the UK, US and other countries, whilst past service costs and settlements in the Eurozone represent charges for special termination benefits reflecting the increased liability arising as a result of early retirements. Settlement costs in the US resulted from a pension risk transfer to an external carrier for a group of small benefit retirees.

c    Most of the contributions made by plan participants into UK pension plans were made under salary sacrifice.

d    The benefit payments amount shown above comprises $2,935 million benefits and $428 million settlements, plus $40 million of plan expenses incurred in the administration of the benefit.

e    The benefit obligation for the US is made up of $7,728 million for pension liabilities and $2,459 million for other post-retirement benefit liabilities (which are unfunded and are primarily retiree medical liabilities). The benefit obligation for the Eurozone includes $5,060 million for pension liabilities in Germany which is largely unfunded.

f    The 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.

g    The fair value of plan assets includes borrowings related to the LDI programme as described on page 221.

23. Pensions and other post-retirement benefits – continued

					$ million
					2019
	UK	US	Eurozone	Other	Total
Analysis of the amount charged to profit or loss
Current service costa	227	263	81	38	609
Past service costb	2	—	5	(1)	6
Settlement	—	(13)	8	—	(5)
Operating charge relating to defined benefit plans	229	250	94	37	610
Payments to defined contribution plans	42	188	7	38	275
Total operating charge	271	438	101	75	885
Interest income on plan assetsa	(909)	(285)	(43)	(46)	(1,283)
Interest on plan liabilities	757	387	133	69	1,346
Other finance (income) expense	(152)	102	90	23	63
Analysis of the amount recognized in other comprehensive income
Actual asset return less interest income on plan assets	2,945	1,079	220	97	4,341
Change in financial assumptions underlying the present value of the plan liabilities	(2,294)	(1,036)	(748)	(92)	(4,170)
Change in demographic assumptions underlying the present value of the plan liabilities	136	91	3	(4)	226
Experience gains and losses arising on the plan liabilities	(57)	(22)	6	4	(69)
Remeasurements recognized in other comprehensive income	730	112	(519)	5	328

a The 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.

b Past service costs and settlements have arisen from restructuring programmes and represent charges for special termination benefits reflecting the increased liability arising as a result of early retirements. Settlements in the US are the result of a buy-out transaction for the pensions of a group of low value annuitants.

Disclosure of sensitivity analysis for actuarial assumptions

A one-percentage point change, in isolation, in certain assumptions as at 31 December 2021 for the group’s pensions and other post-retirement benefit expense would have had the effects shown in the tables below. The effects shown for the expense in 2022 comprise the total of current service cost and net finance income or expense.

						$ million
					One percentage point
	UK		US		Eurozone
	Increase	Decrease	Increase	Decrease	Increase	Decrease
Discount ratea
Effect on expense in 2022	(248)	159	(57)	50	(3)	(6)
Effect on obligation at 31 December 2021	(5,143)	6,788	(951)	1,171	(980)	1,238
Inflation rateb
Effect on expense in 2022	74	(71)	10	(8)	32	(26)
Effect on obligation at 31 December 2021	4,062	(3,912)	60	(51)	880	(748)

a    The amounts presented reflect that the discount rate is used to determine the asset interest income as well as the interest cost on the obligation.

b    The 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.

Disclosure of additional information about defined benefit plans [text block]

			$ million
		One year increase
	UK	US	Eurozone
Longevity
Effect on expense in 2022	25	4	7
Effect on obligation at 31 December 2021	1,402	119	291

Disclosure of information about maturity profile of defined benefit obligation

The expected benefit payments, which reflect expected future service, as appropriate, but exclude plan expenses, up until 2031 and the weighted average duration of the defined benefit obligations at 31 December 2021 are as follows:

					$ million
Estimated future benefit payments	UK	US	Eurozone	Other	Total
2022	1,100	683	328	97	2,208
2023	1,141	546	319	91	2,097
2024	1,163	529	312	92	2,096
2025	1,164	527	312	92	2,095
2026	1,185	523	299	93	2,100
2027-2031	6,184	2,501	1,397	476	10,558
					Years
Weighted average duration	17.9	12.7	15.9	12.5