BMW consults on DB pension closure

BMW Group has launched a consultation into closing its final salary pension scheme to new entrants following several months of negotiations.

The group has clarified that the statutory consultation period, which began on 23 July, does not close the door on future discussions.

BMW Group employs around 5,000 workers across four UK plants in Oxford, Swindon, Warwickshire and West Sussex.

If the scheme is closed, new joiners will be able to join a group personal pension (GPP) plan that is already offered in other parts of the business. The organisation’s auto-enrolment staging date is 1 August 2013.

A spokesperson from BMW said: “The proposed closure of this UK pension scheme to new entrants, who in future would join a defined contribution pension scheme, is in line with the BMW Group’s strategy to offer similar pension schemes to its employees worldwide.

“This proposal will have no impact on the pensions of employees who are currently members of the [DB] scheme.

“Currently BMW Group offers DC schemes in around 20 countries, including Germany, the US and China. Nearly 90% of all other UK car manufacturers have already changed to DC schemes.

“Rising and volatile pension costs are having an adverse impact on the competitiveness of the BMW Group businesses in the UK, which is a significant sales and production location for the organisation.

“We need, therefore, to ensure that the pension benefit we provide to our current and future employees is at a cost we can both afford and predict to ensure the UK remains a competitive location.”

Roger Maddison, national officer at trade union Unite, said: “The organisations and Unite have been in discussions for several months.

“However, BMW has failed to convince the union that this change will not lead to a closure of the pension scheme to existing employees in the future.

“In our experience, moves to close pension schemes to new entrants always end with an attack on existing employees’ pensions. Workers fear that this move by BMW is just the thin end of the wedge.”