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Pensions and other post-retirement benefits (Tables)
 12 Months Ended
Dec. 31, 2019
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 obligation
 
 
 
UK
 
 
US
 
 
Eurozone
 
2019
2018
2017
2019
2018
2017
2019
2018
2017
Discount rate for plan liabilities
 
2.1
2.9
2.5
3.1
4.1
3.5
1.3
2.0
1.9
Rate of increase in salaries
 
3.4
3.8
4.1
3.9
3.9
4.1
3.1
3.1
3.0
Rate of increase for pensions in payment
 
2.7
3.0
2.9
—
—
—
1.5
1.5
1.4
Rate of increase in deferred pensions
 
2.7
3.0
2.9
—
—
—
0.5
0.5
0.6
Inflation for plan liabilities
 
2.7
3.1
3.1
1.5
1.5
1.7
1.7
1.7
1.6
 
 
 
 
 
 
 
 
 
 
%
Financial assumptions used to determine benefit expense
 
 
 
UK
 
 
US
 
 
Eurozone
 
2019
2018
2017
2019
2018
2017
2019
2018
2017
Discount rate for plan service cost
 
3.0
2.6
2.7
4.2
3.6
4.1
2.5
2.4
2.1
Discount rate for plan other finance expense
 
2.9
2.5
2.7
4.1
3.5
3.9
2.0
1.9
1.7
Inflation for plan service cost
 
3.1
3.1
3.2
1.5
1.7
1.8
1.7
1.6
1.6
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

 
 
2019

2018

2017

2019

2018

2017

2019

2018

2017

Life expectancy at age 60 for a male currently aged 60
 
27.3

27.4

27.4

24.9

25.1

25.1

25.7

25.6

25.1

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

28.9

29.0

26.7

26.9

26.8

28.3

28.1

27.6

Life expectancy at age 60 for a female currently aged 60
 
28.7

28.8

28.8

28.0

28.5

28.4

29.1

29.0

29.0

Life expectancy at age 60 for a female currently aged 40
 
30.5

30.6

30.5

29.7

30.1

30.0

31.2

31.2

31.4
Disclosure of fair value of plan assets
The current asset allocation policy for the major plans at 31 December 2019 was as follows:
 
 
UK
US
Asset category
 
%
%
Total equity (including private equity)
 
28
40
Bonds/cash (including LDI)
 
65
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 197.
 
 
 
 
 
 
$ million

 
 
UKa

USb

Eurozone

Other

Total

Fair value of pension plan assets
 
 
 
 
 
 
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

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

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
Disclosure of net defined benefit liability (asset)
 
 
 
 
 
 
$ 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

Settlementb
 
—

(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

Movements in benefit obligation during the year
 
 
 
 
 
 
Benefit obligation at 1 January
 
26,830

9,696

6,906

1,686

45,118

Exchange adjustments
 
942

—

(142
)
26

826

Operating charge relating to defined benefit plans
 
229

250

94

37

610

Interest cost
 
757

387

133

69

1,346

Contributions by plan participantsc
 
20

—

2

6

28

Benefit payments (funded plans)d
 
(1,207
)
(830
)
(76
)
(75
)
(2,188
)
Benefit payments (unfunded plans)d
 
(6
)
(205
)
(273
)
(15
)
(499
)
Reclassified as assets held for sale
 
—

(146
)
—

—

(146
)
Disposals
 
—

—

(30
)
—

(30
)
Remeasurements
 
2,215

967

739

92

4,013

Benefit obligation at 31 Decembera e
 
29,780

10,119

7,353

1,826

49,078

Movements in fair value of plan assets during the year
 





Fair value of plan assets at 1 January
 
32,085

7,195

2,112

1,290

42,682

Exchange adjustments
 
1,141

—

(43
)
24

1,122

Interest income on plan assetsa f
 
909

285

43

46

1,283

Contributions by plan participantsc
 
20

—

2

6

28

Contributions by employers (funded plans)
 
236

4

85

24

349

Benefit payments (funded plans)d
 
(1,207
)
(830
)
(76
)
(75
)
(2,188
)
Reclassified as assets held for sale
 
—

(78
)
—

—

(78
)
Remeasurementsf
 
2,945

1,079

220

97

4,341

Fair value of plan assets at 31 Decemberg
 
36,129

7,655

2,343

1,412

47,539

Surplus (deficit) at 31 December
 
6,349

(2,464
)
(5,010
)
(414
)
(1,539
)
Represented by
 





Asset recognized
 
6,588

387

27

51

7,053

Liability recognized
 
(239
)
(2,851
)
(5,037
)
(465
)
(8,592
)
 
 
6,349

(2,464
)
(5,010
)
(414
)
(1,539
)
The surplus (deficit) may be analysed between funded and unfunded plans as follows
 





Funded
 
6,588

387

(136
)
(87
)
6,752

Unfunded
 
(239
)
(2,851
)
(4,874
)
(327
)
(8,291
)
 
 
6,349

(2,464
)
(5,010
)
(414
)
(1,539
)
The defined benefit obligation may be analysed between funded and unfunded plans as follows
 





Funded
 
(29,541
)
(7,268
)
(2,479
)
(1,499
)
(40,787
)
Unfunded
 
(239
)
(2,851
)
(4,874
)
(327
)
(8,291
)
 
 
(29,780
)
(10,119
)
(7,353
)
(1,826
)
(49,078
)
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 in the Eurozone 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.
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 $2,304 million benefits and $346 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 $7,789 million for pension liabilities and $2,330 million for other post-retirement benefit liabilities (which are unfunded and are primarily retiree medical liabilities). The benefit obligation for the Eurozone includes $4,567 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 196.
24. Pensions and other post-retirement benefits – continued
 
 
 
 
 
 
$ 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 196.
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

Settlement
 
—

—

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

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.

Disclosure of sensitivity analysis for actuarial assumptions
A one-percentage point change, in isolation, in certain assumptions as at 31 December 2019 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 2020 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 2020
 
(274
)
227

(66
)
58

(1
)
(11
)
Effect on obligation at 31 December 2019
 
(4,729
)
6,364

(1,191
)
1,478

(1,060
)
1,347

Inflation rateb
 
 
 
 
 
 
 
Effect on expense in 2020
 
171

(134
)
11

(9
)
35

(27
)
Effect on obligation at 31 December 2019
 
4,711

(3,890
)
67

(54
)
978

(824
)
Salary growth
 
 
 
 
 
 
 
Effect on expense in 2020
 
42

(36
)
13

(11
)
7

(7
)
Effect on obligation at 31 December 2019
 
604

(525
)
80

(67
)
93

(89
)
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 2020
 
31

6

9

Effect on obligation at 31 December 2019
 
1,140

147

306
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 2029 and the weighted average duration of the defined benefit obligations at 31 December 2019 are as follows:
 
 
 
 
 
 
$ million

Estimated future benefit payments
 
UK

US

Eurozone

Other

Total

2020
 
1,065

743

333

104

2,245

2021
 
1,078

789

323

98

2,288

2022
 
1,098

711

319

101

2,229

2023
 
1,138

718

314

98

2,268

2024
 
1,151

699

300

99

2,249

2025-2029
 
5,895

3,277

1,438

489

11,099

 
 
 
 
 
 
Years

Weighted average duration
 
18.3

13.2

16.4

13.0