BP will retain DB scheme despite new 4% deficit
UK – The slump in the equity markets means the $16.9bn (€19.2bn) BP Amoco UK pension scheme only has enough assets to cover 96% of its liabilities, opposed to 120% the previous year, according to its latest annual report. However, the company says it won’t close its defined benefit scheme, the UK’s largest, to new members or change its investment strategy as a consequence.
The fund’s value of $16.9bn at the end of 2001 has dropped from the $18bn (€20.5bn) it reported in 2000. The fund’s actuaries blame the slump on the fall in the value of equity markets – equities account for 72.4% of the UK pension fund - and the new accounting principle, FRS17.
But BP says it will neither reduce its exposure to equities nor close its DB scheme to new members, as other companies have done recently in the UK in response to FRS17. The company says its in-house management strategy will also remain intact, since it claims it has consistently produced robust growth rates.