German automaker BMW is freezing its defined benefit plan for US workers and moving them into a defined contribution plan, the company confirmed.
The move, aimed at reducing BMW’s retirement obligations, will seal up the pension assets on June 30. The following day, all American workers at the auto manufacturer will be in the same retirement plan, a defined contribution program. Ex-DB enrollees will keep the benefits they have accrued, but will no longer be able to contribute anything toward them, as that will go to the DC.
“The BMW Group is committed to providing our associates with flexible, competitive, and meaningful benefits that add significant value to their compensation package,” the company said in a statement obtained by CIO. “Each year, we review our benefits and compare them to others within the BMW Group global network, the automotive industry, and top employers nationwide to ensure we have an attractive overall benefits offering.”
The big freeze was inevitable, as BMW had not allowed workers hired after March 1, 2012, to participate in the traditional retirement plan. The company’s UK division had frozen its pension assets in 2017, an indicator that obligations in the US would also be chilled eventually.
The company recently announced its expectations for a tougher year, and in 2018, saw its earnings before interest and taxes fall by 8%. BMW is embarking on an expensive quest to improve the technology within its vehicles, and to shift to electric and self-driving cars.
Current retirees will be unaffected by the situation.
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Tags: BMW, Corporate Pension, Defined Benefit Plan, Defined Contribution Plan, Pension, Pension Freeze