I am sorry to hear from the BP Pensioners Group that BP has been less than transparent in its dealings with its pensioners. Reports from the meeting tell of the BPPG’s questions being deemed “not relevant to the AGM“.

While the high security was probably to prevent protests from “Just stop oil”, there appears to have been a concerted effort to stop the issues of BP pensioners being discussed which suggests a pension sponsor on the back foot.

BP’s pensioners have been labelled “entitled” and “spoiled” but the facts speak differently.

I quote from a linked in post by the same BPPG member Ulrich Hermans

For the third year in a row, bp has failed to honor its commitments to increase its UK pension in line with the UK inflation rate, continuing to devalue the pension promised to their former employees. Once again, the increase was below inflation even though the fund’s trustees, who should be in the best position to judge the financial position of the fund, had asked for an additional increase. And once again bp’s attempt to justify their decision vacillates between the irrelevant, the incomplete and straight-out gaslighting.

bp claims that “the Company took into account a wide range of factors, including increases to the current cost of living, the funding position of the BPPF and the economic impact for bp. The Company also considered the interests of its broader stakeholders, including other members of the BPPF, employees in the UK and members of the Company’s pension arrangements outside of the UK.”

Let’s be clear:

1. The trustees clearly had determined that a £6 billion fund surplus is enough to keep the fund in a healthy financial position and still be able to pay out an additional increase. Why does bp think they are in a better position to make this judgement than the people charged with looking after the fund?

2. The fund has a surplus. The increase could have been covered by the fund without requiring any additional payments by bp. The economic impact on bp is zero.

3. The interests of other alleged stakeholders are irrelevant. The pension fund is to be managed for its beneficiaries — the UK pensioners. They are the ones who accepted lower-than-market salaries and made additional contributions into the fund. The fund belongs to them, not bp.

4. Affiliates outside the UK have their own pension plans, funded by the local organizations and/or employees. All the plans are ring-fenced, and decisions made by the administrators of one plan have no bearing on the others.

5. Contrary to what bp claims, the only thing notable about this year’s pension increase of 5% exceeding their salary increase is that bp apparently does not pay their current employees enough. The pension is not a gift; the pensioners earned it during their working years and bp made commitments that we now expect to be fulfilled. Anything else would be a retroactive pay cut since we “bought” inflation-matching increases during our working years.

6. bp’s comparison to the CPI is also irrelevant as our contracts and pension plan documents clearly state that the relevant measure is RPI. If bp wants to change the yardstick, let’s use a goods and services basket geared towards age-related expenditures. Spoiler alert: it will be greater than either CPI or RPI.

Given that the company is already in the spotlight of parliamentary inquiries, and given a verdict in a US federal court convicting bp of fraud-like behavior towards their US retirees, you would think that bp would try to improve the company’s image.

This is not the way.

https://lnkd.in/gXyWvetD

This is not a local issue either . Patrick Hosking  writes this week in the Times

The sponsors of the biggest DB schemes tend to be mature companies with their fast-growing years behind them. They are far more wedded to share buybacks and dividends than innovative new capital investment. After struggling with deficits for years, they tend to see their DB schemes as tiresome legacy issues. Many can’t wait to park them with a willing insurer through a buy-out deal and walk away.

BP’s behavior at its AGM suggests that Hosking may have it in mind and we read a few paragraphs on that he does.

…according to a trenchantly argued submission from a ginger group of BP pension fund members, the BP Pensioners Group. Attempts by employers to evade their promises will be “legion” it says; they will “trim back or remove any benefit possible”; they will “abuse loopholes” in the rules to maximise their clawbacks. They will push hard to minimise what members should “reasonably expect”.

Hosking doesn’t hold back when comparing the attitude of senior management to their own compensation and their attitude to releasing pension surplus to their former colleagues

[BPPG]also warned that the prospect of executive bonuses being fattened up by success in grabbing back surpluses will be far more potent in driving company behaviour than any residual feeling of responsibility to ensure schemes pay every last penny of promised pensions.

There is no organisation that campaigns for pensioners rights, there are only organisations that represent pension schemes (PLSA), employers (CBI) and union staff (TUC). The voice of the pensioner is not heard because there is no economic value in those who have left the workforce to retire. But pensioners at BP have found a way to make their voice heard and it sounds like they are getting listened to. Patrick Hosking is right to be listening and to be drawing a stark conclusion.

The bitter dispute with BP is just “a foretaste” of how relations between many other DB pension fund members and their former employers are going to sour if the surplus-grabbing reforms are pushed through without proper safeguards, BPPG argues. The old world is dead.