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Pensions and other post-retirement benefits (Tables)
 12 Months Ended
Dec. 31, 2018
Employee Benefits [Abstract]  
Disclosure of defined benefit plans
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

 
 
2018

2017

2016

2018

2017

2016

2018

2017

2016

Life expectancy at age 60 for a male currently aged 60
 
27.4

27.4

28.0

25.1

25.1

25.7

25.6

25.1

25.0

Life expectancy at age 60 for a male currently aged 40
 
28.9

29.0

30.0

26.9

26.8

27.5

28.1

27.6

27.6

Life expectancy at age 60 for a female currently aged 60
 
28.8

28.8

29.5

28.5

28.4

29.3

29.0

29.0

28.9

Life expectancy at age 60 for a female currently aged 40
 
30.6

30.5

31.9

30.1

30.0

31.0

31.2

31.4

31.3

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 obligation
 
 
 
UK
 
 
US
 
 
Eurozone
 
2018
2017
2016
2018
2017
2016
2018
2017
2016
Discount rate for plan liabilities
 
2.9
2.5
2.7
4.1
3.5
3.9
2.0
1.9
1.7
Rate of increase in salaries
 
3.8
4.1
4.6
3.9
4.1
4.2
3.1
3.0
3.0
Rate of increase for pensions in payment
 
3.0
2.9
3.0
—
—
—
1.5
1.4
1.5
Rate of increase in deferred pensions
 
3.0
2.9
3.0
—
—
—
0.5
0.6
0.5
Inflation for plan liabilities
 
3.1
3.1
3.2
1.5
1.7
1.8
1.7
1.6
1.6
 
 
 
 
 
 
 
 
 
 
%
Financial assumptions used to determine benefit expense
 
 
 
UK
 
 
US
 
 
Eurozone
 
2018
2017
2016
2018
2017
2016
2018
2017
2016
Discount rate for plan service cost
 
2.6
2.7
4.0
3.6
4.1
4.2
2.4
2.1
2.7
Discount rate for plan other finance expense
 
2.5
2.7
3.9
3.5
3.9
4.0
1.9
1.7
2.4
Inflation for plan service cost
 
3.1
3.2
3.1
1.7
1.8
1.5
1.6
1.6
1.8
Disclosure of fair value of plan assets
The current asset allocation policy for the major plans at 31 December 2018 was as follows:
 
 
UK
US
Asset category
 
%
%
Total equity (including private equity)
 
30
40
Bonds/cash (including LDI)
 
63
60
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 176.
24. Pensions and other post-retirement benefits – continued
 
 
 
 
 
 
$ million

 
 
UKa

USb

Eurozone

Other

Total

Fair value of pension plan assets
 
 
 
 
 
 
At 31 December 2018
 
 
 
 
 
 
Listed equities – developed markets
 
5,191

1,238

413

306

7,148

   – emerging markets
 
950

63

65

56

1,134

Private equityc
 
2,792

1,495

—

4

4,291

Government issued nominal bondsd
 
4,263

2,072

895

533

7,763

Government issued index-linked bondsd
 
17,491

—

102

—

17,593

Corporate bondsd
 
4,606

2,184

506

243

7,539

Propertye
 
2,311

6

57

25

2,399

Cash
 
376

73

42

83

574

Other
 
116

64

32

40

252

Debt (repurchase agreements) used to fund liability driven investments
 
(6,011
)
—

—

—

(6,011
)
 
 
32,085

7,195

2,112

1,290

42,682

At 31 December 2017
 
 
 
 
 
 
Listed equities – developed markets
 
9,548

2,158

537

376

12,619

   – emerging markets
 
2,220

220

83

53

2,576

Private equityc
 
2,679

1,461

—

—

4,140

Government issued nominal bondsd
 
2,663

1,777

941

545

5,926

Government issued index-linked bondsd
 
16,177

—

2

—

16,179

Corporate bondsd
 
4,682

2,024

546

272

7,524

Propertye
 
2,211

6

71

30

2,318

Cash
 
390

80

21

98

589

Other
 
104

53

23

45

225

Debt (repurchase agreements) used to fund liability driven investments
 
(5,583
)
—

—

—

(5,583
)
 
 
35,091

7,779

2,224

1,419

46,513

At 31 December 2016
 
 
 
 
 
 
Listed equities – developed markets
 
11,494

2,283

436

363

14,576

   – emerging markets
 
2,549

220

54

46

2,869

Private equityc
 
2,754

1,442

1

—

4,197

Government issued nominal bondsd
 
489

1,438

821

448

3,196

Government issued index-linked bondsd
 
9,384

—

4

—

9,388

Corporate bondsd
 
4,042

1,732

427

259

6,460

Propertye
 
1,970

6

45

28

2,049

Cash
 
547

105

17

83

752

Other
 
(68
)
90

74

83

179

Debt (repurchase agreements) used to fund liability driven investments
 
(2,981
)
—

—

—

(2,981
)
 
 
30,180

7,316

1,879

1,310

40,685

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 third-party net asset valuation.
d Bonds held by pension plans are valued using quoted prices in active markets. Where quoted prices are not available, quoted prices for similar instruments in active markets are used.
e Properties are valued based on an analysis of recent market transactions supported by market knowledge derived from third-party valuers.
Disclosure of net defined benefit liability (asset)
 
 
 
 
 
 
$ million

 
 
 
 
 
 
2018

 
 
UK

US

Eurozone

Other

Total

Analysis of the amount charged to profit or loss
 
 
 
 
 
 
Current service costa
 
295

299

84

43

721

Past service costb
 
15

—

9

4

28

Settlementb
 
—

—

17

—

17

Operating charge relating to defined benefit plans
 
310

299

110

47

766

Payments to defined contribution plans
 
38

178

5

40

261

Total operating charge
 
348

477

115

87

1,027

Interest income on plan assetsa
 
(868
)
(262
)
(44
)
(45
)
(1,219
)
Interest on plan liabilities
 
774

369

136

67

1,346

Other finance (income) expense
 
(94
)
107

92

22

127

Analysis of the amount recognized in other comprehensive income
 
 
 
 
 
 
Actual asset return less interest income on plan assets
 
(722
)
(256
)
(69
)
(36
)
(1,083
)
Change in financial assumptions underlying the present value of the plan liabilities
 
1,770

945

14

65

2,794

Change in demographic assumptions underlying the present value of the plan liabilities
 
123

(9
)
(42
)
7

79

Experience gains and losses arising on the plan liabilities
 
520

41

(43
)
9

527

Remeasurements recognized in other comprehensive income
 
1,691

721

(140
)
45

2,317

Movements in benefit obligation during the year
 
 
 
 
 
 
Benefit obligation at 1 January
 
31,513

10,820

7,275

1,873

51,481

Exchange adjustments
 
(1,589
)
—

(303
)
(113
)
(2,005
)
Operating charge relating to defined benefit plans
 
310

299

110

47

766

Interest cost
 
774

369

136

67

1,346

Contributions by plan participantsc
 
21

—

2

7

30

Benefit payments (funded plans)d
 
(1,780
)
(597
)
(84
)
(83
)
(2,544
)
Benefit payments (unfunded plans)d
 
(6
)
(218
)
(301
)
(17
)
(542
)
Disposals
 
—

—

—

(14
)
(14
)
Remeasurements
 
(2,413
)
(977
)
71

(81
)
(3,400
)
Benefit obligation at 31 Decembera e
 
26,830

9,696

6,906

1,686

45,118

Movements in fair value of plan assets during the year
 





Fair value of plan assets at 1 January
 
35,091

7,779

2,224

1,419

46,513

Exchange adjustments
 
(1,883
)
—

(93
)
(73
)
(2,049
)
Interest income on plan assetsa f
 
868

262

44

45

1,219

Contributions by plan participantsc
 
21

—

2

7

30

Contributions by employers (funded plans)
 
490

7

88

25

610

Benefit payments (funded plans)d
 
(1,780
)
(597
)
(84
)
(83
)
(2,544
)
Disposals
 
—

—

—

(14
)
(14
)
Remeasurementsf
 
(722
)
(256
)
(69
)
(36
)
(1,083
)
Fair value of plan assets at 31 Decemberg
 
32,085

7,195

2,112

1,290

42,682

Surplus (deficit) at 31 December
 
5,255

(2,501
)
(4,794
)
(396
)
(2,436
)
Represented by
 





Asset recognized
 
5,473

418

29

35

5,955

Liability recognized
 
(218
)
(2,919
)
(4,823
)
(431
)
(8,391
)
 
 
5,255

(2,501
)
(4,794
)
(396
)
(2,436
)
The surplus (deficit) may be analysed between funded and unfunded plans as follows
 





Funded
 
5,473

396

(152
)
(97
)
5,620

Unfunded
 
(218
)
(2,897
)
(4,642
)
(299
)
(8,056
)
 
 
5,255

(2,501
)
(4,794
)
(396
)
(2,436
)
The defined benefit obligation may be analysed between funded and unfunded plans as follows
 





Funded
 
(26,612
)
(6,799
)
(2,264
)
(1,387
)
(37,062
)
Unfunded
 
(218
)
(2,897
)
(4,642
)
(299
)
(8,056
)
 
 
(26,830
)
(9,696
)
(6,906
)
(1,686
)
(45,118
)
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 representing the increased liability arising as a result of early retirements mostly in the UK and Eurozone.
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 $3,046 million benefits and $2 million settlements, plus $38 million of plan expenses incurred in the administration of the benefit.
e 
The benefit obligation for the US is made up of $7,290 million for pension liabilities and $2,406 million for other post-retirement benefit liabilities (which are unfunded and are primarily retiree medical liabilities). The benefit obligation for the Eurozone includes $4,328 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 174.
24. Pensions and other post-retirement benefits – continued
 
 
 
 
 
 
$ million

 
 
 
 
 
 
2017

 
 
UK

US

Eurozone

Other

Total

Analysis of the amount charged to profit or loss
 
 
 
 
 
 
Current service costa
 
357

292

85

46

780

Past service costb
 
12

—

5

(1
)
16

Settlementb
 
—

—

13

—

13

Operating charge relating to defined benefit plans
 
369

292

103

45

809

Payments to defined contribution plans
 
31

191

7

38

267

Total operating charge
 
400

483

110

83

1,076

Interest income on plan assetsa
 
(845
)
(266
)
(37
)
(48
)
(1,196
)
Interest on plan liabilities
 
831

393

121

71

1,416

Other finance (income) expense
 
(14
)
127

84

23

220

Analysis of the amount recognized in other comprehensive income
 
 
 
 
 
 
Actual asset return less interest income on plan assets
 
2,396

826

30

43

3,295

Change in financial assumptions underlying the present value of the plan liabilities
 
(236
)
(514
)
336

(47
)
(461
)
Change in demographic assumptions underlying the present value of the plan liabilities
 
734

72

—

(23
)
783

Experience gains and losses arising on the plan liabilities
 
91

(40
)
(36
)
14

29

Remeasurements recognized in other comprehensive income
 
2,985

344

330

(13
)
3,646

Movements in benefit obligation during the year
 
 
 
 
 
 
Benefit obligation at 1 January
 
29,908

10,533

6,820

1,715

48,976

Exchange adjustments
 
2,886

—

915

89

3,890

Operating charge relating to defined benefit plans
 
369

292

103

45

809

Interest cost
 
831

393

121

71

1,416

Contributions by plan participantsc
 
16

—

2

6

24

Benefit payments (funded plans)d
 
(1,903
)
(641
)
(75
)
(89
)
(2,708
)
Benefit payments (unfunded plans)d
 
(5
)
(239
)
(302
)
(20
)
(566
)
Acquisitions
 
—

1

—

—

1

Disposals
 
—

(1
)
(9
)
—

(10
)
Remeasurements
 
(589
)
482

(300
)
56

(351
)
Benefit obligation at 31 Decembera e
 
31,513

10,820

7,275

1,873

51,481

Movements in fair value of plan assets during the year
 
 
 
 
 
 
Fair value of plan assets at 1 January
 
30,180

7,316

1,879

1,310

40,685

Exchange adjustments
 
3,048

—

264

72

3,384

Interest income on plan assetsa f
 
845

266

37

48

1,196

Contributions by plan participantsc
 
16

—

2

6

24

Contributions by employers (funded plans)
 
509

12

87

29

637

Benefit payments (funded plans)d
 
(1,903
)
(641
)
(75
)
(89
)
(2,708
)
Remeasurementsf
 
2,396

826

30

43

3,295

Fair value of plan assets at 31 Decemberg
 
35,091

7,779

2,224

1,419

46,513

Surplus (deficit) at 31 December
 
3,578

(3,041
)
(5,051
)
(454
)
(4,968
)
Represented by
 
 
 
 
 
 
Asset recognized
 
3,838

260

43

28

4,169

Liability recognized
 
(260
)
(3,301
)
(5,094
)
(482
)
(9,137
)
 
 
3,578

(3,041
)
(5,051
)
(454
)
(4,968
)
The surplus (deficit) may be analysed between funded and unfunded plans as follows
 
 
 
 
 
 
Funded
 
3,838

238

(106
)
(101
)
3,869

Unfunded
 
(260
)
(3,279
)
(4,945
)
(353
)
(8,837
)
 
 
3,578

(3,041
)
(5,051
)
(454
)
(4,968
)
The defined benefit obligation may be analysed between funded and unfunded plans as follows
 
 
 
 
 
 
Funded
 
(31,253
)
(7,541
)
(2,330
)
(1,520
)
(42,644
)
Unfunded
 
(260
)
(3,279
)
(4,945
)
(353
)
(8,837
)
 
 
(31,513
)
(10,820
)
(7,275
)
(1,873
)
(51,481
)
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 representing the increased liability arising as a result of early retirements mostly in the UK and Eurozone.
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 $3,235 million benefits and $2 million settlements, plus $37 million of plan expenses incurred in the administration of the benefit.
e 
The benefit obligation for the US is made up of $8,085 million for pension liabilities and $2,735 million for other post-retirement benefit liabilities (which are unfunded and are primarily retiree medical liabilities). The benefit obligation for the Eurozone includes $4,586 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 174.
24. Pensions and other post-retirement benefits – continued
 
 
 
 
 
 
$ million

 
 
 
 
 
 
2016

 
 
UK

US

Eurozone

Other

Total

Analysis of the amount charged to profit or loss
 
 
 
 
 
 
Current service costa
 
333

310

76

71

790

Past service costb
 
17

(24
)
7

1

1

Settlement
 
—

—

9

(1
)
8

Operating charge relating to defined benefit plans
 
350

286

92

71

799

Payments to defined contribution plans
 
30

194

7

33

264

Total operating charge
 
380

480

99

104

1,063

Interest income on plan assetsa
 
(1,086
)
(287
)
(47
)
(51
)
(1,471
)
Interest on plan liabilities
 
1,005

417

159

80

1,661

Other finance (income) expense
 
(81
)
130

112

29

190

Analysis of the amount recognized in other comprehensive income
 
 
 
 
 
 
Actual asset return less interest income on plan assets
 
4,422

330

53

8

4,813

Change in financial assumptions underlying the present value of the plan liabilities
 
(6,932
)
(239
)
(622
)
4

(7,789
)
Change in demographic assumptions underlying the present value of the plan liabilities
 
430

9

12

(5
)
446

Experience gains and losses arising on the plan liabilities
 
55

(62
)
26

15

34

Remeasurements recognized in other comprehensive income
 
(2,025
)
38

(531
)
22

(2,496
)
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 have arisen from restructuring programmes and represent a combination of credits as a result of the curtailment in the pension arrangements of a number of employees mostly in the US and charges for special termination benefits representing the increased liability arising as a result of early retirements mostly in the UK and Eurozone. The UK also includes $12 million of cost resulting from benefit harmonization within the primary plan.
Disclosure of sensitivity analysis for actuarial assumptions
A one-percentage point change, in isolation, in certain assumptions as at 31 December 2018 for the group’s plans would have had the effects shown in the table below. The effects shown for the expense in 2019 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 2019
 
(337
)
295

Effect on pension and other post-retirement benefit obligation at 31 December 2018
 
(6,179
)
8,153

Inflation rateb
 
 
 
Effect on pension and other post-retirement benefit expense in 2019
 
227

(187
)
Effect on pension and other post-retirement benefit obligation at 31 December 2018
 
4,919

(4,225
)
Salary growth
 
 
 
Effect on pension and other post-retirement benefit expense in 2019
 
64

(55
)
Effect on pension and other post-retirement benefit obligation at 31 December 2018
 
653

(595
)
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 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 2028 and the weighted average duration of the defined benefit obligations at 31 December 2018 are as follows:
 
 
 
 
 
 
$ million

Estimated future benefit payments
 
UK

US

Eurozone

Other

Total

2019
 
1,030

787

350

101

2,268

2020
 
1,036

755

339

97

2,227

2021
 
1,056

806

331

97

2,290

2022
 
1,088

749

326

100

2,263

2023
 
1,120

741

317

98

2,276

2024-2028
 
5,777

3,476

1,501

498

11,252

 
 
 
 
 
 
Years

Weighted average duration
 
17.8

9.5

14.2

13.0