BP 2013 Annual Report Download - page 188

30. Pensions and other post-retirement benefits – continued
$ million
2011
UK
pension
plans
US pension
plans
US other
post-
retirement
benefit
plans
Other
plans Total
Analysis of the amount charged to profit before interest and taxation
Current service costa383 280 53 135 851
Past service cost 3 184 – 43 230
Settlement –––44
Operating charge relating to defined benefit plans 386 464 53 182 1,085
Payments to defined contribution plans 5 199 – 41 245
Total operating charge 391 663 53 223 1,330
Analysis of the amount credited (charged) to other finance expense
Interest income on plan assets (1,361) (304) – (178) (1,843)
Interest on plan liabilities 1,263 369 163 448 2,243
Other finance (income) expense (98) 65 163 270 400
Analysis of the amount recognized in other comprehensive income
Actual asset return less interest income on plan assetsa(1,552) 224 (1) (54) (1,383)
Change in financial assumptions underlying the present value of the plan liabilities (2,251) (468) (63) (636) (3,418)
Change in demographic assumptions underlying the present value of the plan
liabilities (429) (44) 102 (6) (377)
Experience gains and losses arising on the plan liabilities (84) (102) 89 (26) (123)
Remeasurements recognized in other comprehensive income (4,316) (390) 127 (722) (5,301)
aThe costs of managing the plan’s investments are treated as being part of the return on plan assets, the costs of administering our pension plan benefits are generally included in current service cost
and the costs of administering our other post-retirement benefit plans are included in the benefit obligation.
At 31 December 2013, reimbursement balances due from or to other companies in respect of pensions amounted to $399 million reimbursement
assets (2012 $381 million) and $15 million reimbursement liabilities (2012 $15 million). These balances are not included as part of the pension
surpluses and deficits, but are reflected within other receivables and other payables in the group balance sheet.
Sensitivity analysis
The discount rate, inflation, salary growth, US healthcare cost trend rate and the mortality assumptions all have a significant effect on the amounts
reported. A one-percentage point change, in isolation, in certain assumptions as at 31 December 2013 for the group’s plans would have had the effects
shown in the table below. The effects shown for the expense in 2014 comprise the total of current service cost and net finance income or expense.
$ million
One percentage point
Increase Decrease
Discount ratea
Effect on pension and other post-retirement benefit expense in 2014 (474) 481
Effect on pension and other post-retirement benefit obligation at 31 December 2013 (6,918) 9,059
Inflation rate
Effect on pension and other post-retirement benefit expense in 2014 521 (397)
Effect on pension and other post-retirement benefit obligation at 31 December 2013 7,120 (5,658)
Salary growth
Effect on pension and other post-retirement benefit expense in 2014 142 (123)
Effect on pension and other post-retirement benefit obligation at 31 December 2013 1,300 (1,158)
US healthcare cost trend rate
Effect on US other post-retirement benefit expense in 2014 16 (13)
Effect on US other post-retirement obligation at 31 December 2013 278 (233)
aThe amounts presented reflect that the discount rate is used to determine the asset interest income as well as the interest cost on the obligation.
One additional year of longevity in the mortality assumptions would have the effects shown in the table below. The effect shown for the expense in
2014 comprises the total of current service cost and net finance income or expense.
$ million
UK
pension
plans
US
pension
plans
US other
post-
retirement
benefit
plans
German
pension
plans
One additional year’s longevity
Effect on pension and other post-retirement benefit expense in 2014 52539
Effect on pension and other post-retirement benefit obligation at 31 December 2013 927 95 46 213
184 BP Annual Report and Form 20-F 2013