Carmichael to lead debate on defined benefit pension challenges

Orkney and Shetland MP, Alistair Carmichael, will today [Wednesday 17 January] lead a debate in Parliament on challenges around the regulation of defined benefit pensions. Mr Carmichael secured the debate to raise concerns in support of BP pension holders, who have faced a real-terms devaluation of their pensions despite record assets in the fund.

BP previously followed a policy of protecting its Defined Benefit pensions from being devalued by inflation as long as the UK Pension Fund had sufficient resources. In 2022 and 2023, however, BP blocked the Pension Fund Trustee from following this practice, causing 58,000 BP pensions to fall by 11% in real-terms value. The BP Pensioner Group, which formed in 2023 in response to the change, has voiced concerns that the move is in preparation of BP offloading its pension fund to a third party, and that other companies may follow suit if this happens.

9.6 million UK citizens are members of Defined Benefit pension schemes with total assets of £1.7 trillion. The vast majority of these schemes are in a surplus of assets over liabilities - totalling £359 billion.

Mr Carmichael said:

“I am glad to have secured this debate – the first dedicated debate ever held in Parliament on defined benefit pensions – which will be an important opportunity to raise the concerns of pensioners, particularly those within the BP pension scheme.

“Everyone has been facing a squeeze in living standards in the past few years, with incomes falling short of inflation. That is bad enough for those in work. For pensioners facing real-terms cuts in their earned payments it is still worse, as they have no opportunity to negotiate pay rises or job changes in the way that those in work can.

“Whether or not what BP is doing with regard to its pension scheme is within the law is besides the point. If the result is that pensioners find their entitlements being salami sliced away over time then those regulations may need to be revisited.

“This is the canary in the coalmine – or perhaps in the oil-rig – for people with defined benefit pensions across the entire country. I have already heard from other pensioner groups with similar concerns and I suspect that other companies will be watching this case with great interest. If ministers do not take this seriously then we risk sleepwalking into a significant devaluation of people’s pensions. The government must be on notice.”