UK Pensions Consultation Forum:‘working for everyone’s benefit’

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FOR BP INTERNAL USE ONLY

UK Pensions & Benefits

Defined Benefit employeesSeptember 2014

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Contents

• Your benefits package

• Main features of the BP Pension Scheme

• Core benefits

• Flexible benefits

• Voluntary benefits

Your benefits, your way

BP’s flexible benefits plan is called your benefits, your way

Your benefits package has three elements:

• Core benefits

− Benefits you get automatically, paid for by BP

− ‘Backbone’ of overall benefits package

− Life assurance, income protection & health benefits

• Flexible benefits

− Buy additional benefits with earnings

• Voluntary benefits

− Wide range of discounted goods and services

− Available to choose all year round

− Charitable giving opportunities and more

Overview of BP Pension Scheme

• Pension benefits

• Contributory options

− Taxable allowances

• Normal retirement

− Age 60 for joiners on or before 30 November 2006

− Age 65 for joiners from 1 December 2006

• Early retirement

• Options on retirement

• State Pension Scheme

• Death benefits

• Use PensionLine

BP Pension Scheme - benefits

• Non-contributory 60ths final salary pension:

Pensionable service (in years and days) x final salary

60

− Member (pre December 2006 joiner) retires age 60 after 20 years’ pensionable service with a final salary of £30,000.

− 20 x £30,000 = £10,000 annual pension 60

‘Final salary’ is basic annual salary, including any permanent shift allowance, but excluding overtime and other variable payments.

• Life cover of four times salary

• Full details are in the new explanatory booklet at pensionline.bp.com plus 24/7 benefit statement and modelling facilities

Your contributory options

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• Higher pension build-up rates

Pensionable service (in years and days) x final salary

Accrual rate

− Example: Member retiring at age 60 after 30 years’ pensionable service and final salary of £30,000; 20 years under 60th option; 10 years under 40th option

20 x £30,000 = £10,000 10 x £30,000 = £7,500

60 40

Total pension = £17,500 a year

• Tax efficient contributions paid via salary sacrifice monthly

• Start, stop or switch options anytime during the year via the “your benefits your way” portal as an “Anytime Event”.

• Alternative: pay AVCs or contribute to another pension

You contribute(as % of pensionable salary)

2 3 5 10 15

Your pension builds up at the rate of

1/54 1/51 1/45 1/40 1/35

Your contributory options

OptionFinal

Salary £ a year

You contribute**

£ a year

Pension secured***£ a year

0:60* 30,000 0 10,000 (20/60) 33%

2:54 30,000 600 (2%) 11,111 (20/54) 37%

3:51 30,000 900 (3%) 11,765 (20/51) 39%

5:45 30,000 1,500 (5%) 13,333 (20/45) 44%

10:40 30,000 3,000 (10%) 15,000 (20/40) 50%

15:35 30,000 4,500 (15%) 17,143 (20/35) 57%

Example: Member with 20 years’ service and a final salary of £30,000

* Non-contributory option

** Your contributions are made via salary sacrifice, so you save tax at your highest marginal rate

*** Assumes you maintain constant contribution level over 20 years

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Annual Allowance (AA)

• Maximum pension savings each tax year without any tax liability

• BP’s Scheme year runs 1 January to 31 December known as PIP Year (PIP = Pension Input Period)

For example:1 January 2013 to 31 December 2013 = PIP Year 2013 = Tax Year 2013/14

• Allowance currently £40,000 per annum

• Pension savings = growth in your pension during PIP year

− Final Salary Scheme = increase in accrued pension

− Money Purchase Scheme = actual contributions paid in

• CPI growth allowable before counting for AA.

• Savings above allowance subject to a tax charge

• Can use any unused allowance from previous 3 years if needed (Carry Forward)

• AA Statements available on Pensionline (currently whilst employed only)

• Taxable Pension Savings need to be entered on Self Assessment Form

• Tax charge can be paid via “Scheme Pays” providing over £2,000

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Scheme Pays

• Tax charge must be over £2,000 in the Scheme

• Cannot add any non-BP Scheme’s tax charge to BP’s

• The deadline for notifying the HMRC you are using Scheme Pays for 2013/14 (PIP Year 2013) is 31 January 2015 via self assessment.

• There is a deadline for notifying the Scheme you are using Scheme Pays (for 2013/14 it is 31 July 2015, but if leaving must be before you leave)

• The Scheme Pays tax charge within 3 month of notification

• Tax charge offset from your pension using a pension debit

• BP Pension Scheme factors on PensionLine for 2012, (2013 to be added shortly)

• Scheme Pays form available on PensionLine

• Irreversible decision

• For more information on AA and Scheme Pays see HMRC website and PensionLine – AA Q&As

When you can take your pension

From age Circumstances Benefit65 (normal retirement age)

Standard retirement Full pension

60***If you were an employee on or before 30 November 2006)

Full pension

55- 60* Early retirement

Reduced pension

(3% a year discount if with Company consent)**

50 - 55* Early retirementReduced pension

(4% a year)

* By law the minimum retirement age is now 55 (However, pre-6 April 2006 joiners retain right to retire at 50 on unconsented retirement terms.)

** From 1 March 2008, the reduction 4% a year if retiring without Company consent.

*** If you joined the Scheme after 30/11/2006, the minimum age to receive an unreduced pension is 65.

Examples of early retirement

Age: 58

Pensionable service: 16 years

Accrual option: non-contributory 0:60

Final salary at retirement: £25,000

Annual pension at retirement:

If retiring WITHOUT employer’s consent

Total pensionable service

1/60 x 16 x £25,000 = £6,667

Less 8% £6,667 x 8% = £533

Total annual pension £6,134

If retiring WITH employer’s consent

Total pensionable service

1/60 x 16 x £25,000 = £6,667

Less 6% £6,667 x 6% = £400

David’s total annual pension is £6,267

Options on retirement

• Annual pension, or

• Exchange part of pension for a tax-free cash lump sum

− One-off option only

− Up to 25% of value of pension

− Normally taken from any AVCs in first instance

State pension scheme

• Two parts to State pension

− basic State pension

− additional State pension

• Both payable from State pension age

• Basic pension is flat rate and based on NI contributions record

• Additional pension is earnings related (SERPS and S2P)

• Replaced by single-tier pension from 6 April 2016

• BP Pension Scheme employees contracted-out of S2P

− Pay reduced rate NI contributions

− For BP service the Scheme provides benefits instead of the State

• Getting State pension forecast/profile/statement

− PensionLine; or

− Directgov (process depends on your date of birth)

Pension for spouse/civil partner/dependants

• Pension for your spouse, civil partner or another dependant

− Equal to two-thirds of your pension

• Children’s pensions

• Active members

− 4x basic salary lump sum death-in-service benefits

• Deferred members and pensioners

− five-year pension guarantee

• Death grant to next-of-kin (for pensioners)

• Fill in expression of wishes form and keep it up to date

- Guides Trustee about who to consider for lump sum death benefit (and survivor’s pension in certain circumstances)

- Get Form from PensionLine or from BP Pensions & Benefits Team

Use PensionLine

• Use PensionLine to:

− Check BP Scheme benefits and State pension

− Model changes to contributory options

− Model projected retirement benefits

• Modeller in March to

− Check effect of accrual rate changes and predicted salary increases on Annual Allowance

− Check/download your latest Annual Allowance Statement

• https://pensionline.bp.com

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Core benefits in addition to pension

• Private Medical Insurance (PMI)

− Quicker medical diagnosis and treatment than NHS

− Currently provided by Bupa

• Core benefit limits

− Covers only employee

− Excess of £100/claim in a plan year

− £1,000 per life per plan year in respect of eligible outpatient treatment and therapy costs

− An additional per employee life per plan year benefit of £4,000 applies in respect of employee psychiatric and musculoskeletal treatments

• Can ‘flex up’ PMI at favourable rates

− Add immediate family members

− Remove outpatient limits

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Core benefits in addition to pension

• Face-to-face health screening every three years

− Paid for by BP

– Gold (Bands C & D plus level E and below aged over 40)

– Silver (Level E and below, aged below 40)

– Or buy Gold cover through flexible benefits plan

• Wellness Checkpoint

– Online tools to monitor and manage health all year round

• Employee Assistance Programme (EAP)

– Confidential telephone helpline

– Plus face-to-face counselling if needed

– Financial information, debt counselling and specialist information

Flexible benefits

• You can give up part of your earnings to buy additional:

− Spouse/partner life assurance

− Critical illness insurance

− Dental insurance

− Personal accident insurance

− Childcare vouchers (change anytime via “Anytime Event”)

− Cycle to work- (Only available at Annual enrolment)

− Travel insurance

• Deductions for benefits via salary sacrifice

− valuable tax and NI savings

• Select benefits during annual enrolment window

− Fixed for calendar year, except for ‘qualifying life event’

Voluntary benefits

• Buy them yourself at significant discounts secured by BP

• BP Staff Fuel Card

• Employee car plan

• Insurance cover (e.g. house, car)

• Charitable Giving

• All new employees’ need to register for access to the Voluntary benefits website and access is given within 7-10 days.

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Further Information

Benefit Website

Flexible Benefits(your benefits, your way)

www.bp.com/yourbenefits

Voluntary Benefits www.bp.com/voluntarybenefits

Employee Car Plan www.zenith.co.uk/bpemployees

Employee Assistance Programme (EAP)

www.livewell.optum.com(Username / access code is : BP)

Wellness Checkpointhttps://bpglobal.wellnesscheckpoint.com

Charitable Givinghttps://www.easymatch.com/bpmatch

Who to contact?

• Your benefits, your way

− Helpline: 0800 916 8013 (+44 1737 227513 from overseas)

− Email: bpyourbenefits@towerswatson.com

− Escalations: yourbenefitsyourway@uk.bp.com

• For BP Pension Scheme

− Phone: 0845 602 1063 (+44 1932 767 730 from overseas)

− Email: pensions@uk.bp.com

https://pensionline.bp.com

Thank you for attending

Any questions?

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