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Pension Funds

BMW workers accept deal to freeze 2 pension funds, move to DC plan

BMW workers have voted to accept a revised offer regarding the freezing of its two U.K. pension plans, said trade union Unite.

In a news release on its website Monday, Unite said 81.5% of its members that work at BMW Group's car plants in four locations "backed a revised offer bringing a long-running pensions dispute to an end."

BMW proposed freezing the two plans in September. The automotive group's latest annual report showed U.K. DB assets of €8.7 billion ($9.2 billion) as of Dec. 31, with a deficit of €1.6 billion.

Under the revised offer, the plans will be closed and participants moved into a defined contribution plan. The DC plan was launched in 2014 and has more than 2,000 participants in the U.K. The company matches employee contributions, plus 6%, to a maximum 10% employee and 16% employer contribution. Details on the size of the plan could not be learned by press time.

Unite said the deal also includes "greater flexibility on the timings of transitional payments totaling 22,000 over three years. Alternatively, members can opt for a transitional payment of 25,000 spread over three years to be paid into their new defined contribution scheme," said the release.

The union said BMW initially had offered transitional payments of 7,000, leading to walkouts by participants at all four locations.

"Unite members have overwhelmingly backed the revised pension offer bringing this long-running dispute to an end," said Fred Hanna, Unite national officer, in the release. "BMW initially thought it could railroad its pension changes through with transitional payments of just 7,000. It's testament to the resolve of Unite members and their solidarity that the carmaker was forced to more than triple these payments and give additional guarantees."

The BMW statement added: "We are pleased that the company's offer has been accepted by the majority of Unite members who took part in the union ballot. This outcome follows lengthy negotiations between the company and employee representatives since September last year. It is now intended that employees currently in our defined benefit pension scheme will join the company's defined contribution pension scheme from October 2017. We believe that our pension proposals are fair and will help to ensure our competitiveness as a business, which is ultimately in the long-term interest of all our employees."