BMW UK ending final salary DB pension plans
Auto manufacturer BMW in September 2016 decided to end both of its UK final salary-defined benefit (DB) pension plans. Both plans will cease future accrual as of June 2017, affecting around 5,000 members total.
Citing significant pension fund shortfalls and the cost risks associated with DB plans, BMW explained that their plans are increasingly unsustainable and unaffordable for both the company and the pension plans members.
Unite, the union that represents BMW workers, will fight to prevent the plans from closing, however, and commented that “It is becoming increasingly too easy for highly profitable multinational companies to energetically salami-slice workers’ pensions in pursuit of even greater profits. BMW is blaming both the increase in national insurance payments and the cost of future liabilities as to why the final salary pension has become unaffordable, although, ironically, profits are still rising in the last two quarters.”
BMW has proposed that existing pension fund members can join a defined contribution (DC) plan that was launched in 2014 for new joiners and already has 2,000 members.