Car manufacturer BMW is to consult on the closure of its two final salary pension schemes to future accrual.
BMW is looking to make the changes to the defined benefit (DB) schemes, which have around 5,000 active members, from 1 June 2017. The organisation will encourage staff to join its defined contribution (DC) pension scheme, which currently has approximately 2,000 members.
A 60-day consultation period with employee representative bodies on the proposals will commence on 29 September 2016.
Trade union Unite opposes the changes, and plans to hold a consultative ballot to gauge members’ opinions during the course of the 60-day consultation period.
Tony Murphy, national officer for the automotive industries at Unite, said: “It is clear that our members will be losing thousands of pounds a year in retirement incomes if this proposal is allowed to go ahead.
“This is plainly unacceptable and Unite will be fighting this proposal tooth-and-claw.
“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 did not respond to requests for comment at the time of publication.
A BMW spokesperson said: “BMW Group is proposing to close its two UK defined benefit pension schemes to future accrual from 1 June 2017 and this affects around 5,000 staff across all of the [organisation’s] UK operations. If implemented, all staff would join the [organisation’s] market-leading defined contribution scheme. This pension scheme was launched in early 2014 for new starters and now has over 2,000 members.
“Many UK [organisations] have significant pension fund shortfalls in their defined benefit schemes and the cost and risk associated with these schemes is making them increasingly unsustainable and unaffordable for both members and [organisations]. BMW Group has always prided itself in providing excellent pensions for its staff and wants to act now to protect future pension provision for all its staff and to help protect the cost competitiveness of the UK as a manufacturing base. The [organisation] is now consulting with its employee representative bodies on this proposal.”