No support by BP for discretionary pension increase above the 5% cap in 2023

BreakingGlass

Current plan is for UK Gov to phase out RPI by 2030, hence BP and others will probably be forced to apply a new measure, possibly CPI.

(Public sector pensions moved from RPI to CPI increases back in 2011)

Grumpy_chap

allsort said:

 perhaps there are no instances in which this discretion would be exercised ?

That would probably be about the sum of it 

TheBanker

jimbo620 said:

Over the years BP has had several 'pension holidays' as in the company has not contributed to the fund. I understand the previous comment about protecting the fund for the future but what about an average BP pensioner who cannot supplement their income any more due to age...do they not have some responsibility or loyalty to their previous employees?

The only responsibility they have is to make payments as defined in the scheme rules. They may have discretion to make additional payments, but no responsibility to do so.

Albermarle

Although it is no comfort to the OP, 5% inflation capping (and increasingly shifting to CPI rather than RPI) is not unusual (there are some schemes capped at the statutory minimum of 2.5%) and is ultimately better than the scheme failing and falling into the PPF (assuming BP is a member) where the capping is 2.5%.

Yes I think most people in private sector DB schemes are just glad/hope they are not in too much deficit, and will hopefully survive  !

OldScientist

Albermarle said:

Although it is no comfort to the OP, 5% inflation capping (and increasingly shifting to CPI rather than RPI) is not unusual (there are some schemes capped at the statutory minimum of 2.5%) and is ultimately better than the scheme failing and falling into the PPF (assuming BP is a member) where the capping is 2.5%.

Yes I think most people in private sector DB schemes are just glad/hope they are not in too much deficit, and will hopefully survive  !

I'd agree with that... the bright spot is that according to https://www.ppf.co.uk/sites/default/files/2022-11/PPF_PurpleBook_2022.pdf (which was published in December 2022), the funding ratios were, on average, healthier than they were in 2021 (I think the figures are pre-mini-budget though).

allsort

I learned today that my second DB pension, which I have only been receiving since last summer, will increase by 7%.  The fund information states that "pensions in payment and deferred pensions shall be adjusted annually through the application of a cost of living index based on inflation and purchasing power parity across the organisation’s sites". (which are in Europe).
They've done more for their pensioners than BP - I have no complaints.

Albermarle

They've done more for their pensioners than BP -  the large majority of private sector DB schemes

AlanP_2

It may not make you feel better but you could be in a much worse position.

The scheme I was in (until I took the CETV and transferred out) had all increases to in payment pensions at the company's discretion.

In 14 years there was one increase of 1%.

Grumpy_chap

allsort said:

I learned today that my second DB pension, which I have only been receiving since last summer, will increase by 7%.  The fund information states that "pensions in payment and deferred pensions shall be adjusted annually through the application of a cost of living index based on inflation and purchasing power parity across the organisation’s sites". (which are in Europe).
They've done more for their pensioners than BP - I have no complaints.

Have they really "done more" than BP?
Or have they simply applied the scheme rules?

"Doing more" is not all about the percentage increase between one scheme and another.

As I read the thread, the rules for the BP scheme are for increases linked to index "A", subject to a 5% cap.  A percentage increase higher than the scheme rules index / cap can be agreed on a discretionary basis.  This higher percentage increase would need to be funded by *someone*.

The alternative scheme referenced appears to have scheme rules that require the percentage increase based upon index "B" and it so happens that this index "B" resulted in the 7% increase.  It could be entirely possible that in other years, this index "B" resulted in a lower percentage increase than the capped index "A" under which the BP scheme operates.

DE_612183

Mine was the same - but the trustees decided to aware 8% - they were however smaller than BP and a wholly UK company.