BP has rejected an appeal by its pension trustees for increased payouts to assist thousands of retired employees to manage “challenging circumstances” brought on by the energy crises, from which the company has made record profits.
The trustees of the oil and gas company’s defined-benefit pension scheme have written to 69,000 members to inform them that BP has made the “disappointing decision” to decline a discretionary raise above the scheme cap of 5%. The trustees told retirees that they approached the company in November because of the “impact of the conflict in Ukraine”, and “the difficulties caused for many of your by these recent developments”.
BP recorded profits of $28 billion in the last year. Bernard Looney’s pay, which includes a £1.4m salary, a £2.4m annual bonus, and a £6m long-term bonus, has more than doubled.
Brendan Nelson is the chairman of BP Pension Trustees Limited. He told his members that he would “continue this matter under review”. Later this year, he would “carefully examine” the pension increases that will become effective on May 1, 2024.
BP has argued it is not appropriate to give a more generous award for members of the defined-benefit schemes, as it needs to consider the situation of retirees who are in the defined-contribution schemes and those that don’t have guaranteed pension increases. A BP spokeswoman acknowledged that the current cost of living crisis is a “very hard time” for many people.
Looney was asked to meet with a group pension scheme members who campaign for more generous increases. They pointed out that many FTSE 100 firms have matched the 10.1 percent award given to teachers, doctors and civil servants.
In a letter sent to Looney by the group, it said that the pension fund had “rude” financial health. It also stated that “a pension rise that matches inflation can easily be maintained”, and that a company like BP with its resources and strength of balance sheet should be looking at increasing its support to its most vulnerable stakeholders instead of reducing it to the lowest common denominator.
BP revealed in its latest results that it set aside a significant sum for bonuses to staff after making profits of £4billion. Murray Auchincloss told analysts in May that the $1.4 billion charged to BP was largely due to bonus payments.