BP DB pension funding position swings into £1.4bn surplus

The funding position of BP’s defined benefit (DB) schemes swung from a deficit of £935m at the end of 2020 to a surplus of £1.4bn, as of 30 June 2021, its second-quarter results report has revealed.

As reported by our sister title, Pensions Age, following a review during the second quarter of 2021, BP found that its DB pension surplus had risen to £719m at the end of March 2020, before hitting £1.4bn at the end of Q2.

The firm’s DB assets increased from £5.72bn to £7.55bn in the first six months of 2021, while its liabilities declined from £6.65bn to £6.11bn during the same period.

BP attributed the swing in its DB pension funding position to net actuarial gains reported in other comprehensive income arising from increases in the UK, US and Eurozone discount rates.

This was partially offset by increases in inflation rates and negative asset performance.

There was also a reduction in liabilities for the UK-funded final salary pension scheme in the second quarter, which was closed to future accrual on 30 June 2021.

For active members of the scheme at 30 June 2021, benefits payable are now linked to salary as at that date rather than to salary on retirement. 

“The current environment is likely to continue to affect the values of the plan assets and obligations resulting in potential volatility in the amount of the net DB pension plan surplus/deficit recognised,” the report stated.

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