BMW 2011 Annual Report Download - page 119

119 GROUP FINANCIAL STATEMENTS
Moody’s Standard & Poor’s
Non-current financial liabilities A2 A –
Current financial liabilities P-1 A-2
Outlook stable positive
With their current long-term ratings of A- (S & P) and A2
(Moody’s), the agencies continue to confirm BMW AG’s
robust creditworthiness for debt with a term of more
than one year. BMW AG’s creditworthiness for short-term
The improved rating and outlook reflect the world-
wide rise in demand for premium cars, the successful
implementation of measures in conjunction with
debt is also classified by the rating agencies as good,
thus enabling it to obtain refinancing funds on competi-
tive conditions.
Strategy Number ONE and the stable financial posi-
tion of the BMW Group.
Pension provisions
Pension provisions are recognised as a result of commit-
ments to pay future vested pension benefits and current
pensions to present and former employees of the BMW
Group and their dependants. Depending on the legal,
economic and tax circumstances prevailing in each coun-
try,
various pension plans are used, based generally on
the length of service, final salary and remuneration struc-
ture
of the employees involved. Due to similarity of
nature, the obligations of BMW Group companies in
the USA and of BMW (South Africa) (Pty) Ltd., Pretoria,
for post-employment medical care are also disclosed as
pension provisions. The provision for these pension-like
obligations amounts to € 120 million (2010: € 93 million)
and is measured, similar to pension obligations, in
ac-
cordance with IAS 19. In the case of post-employment
medical care, it is assumed that the costs will increase
on a long-term basis by 6 % p.a. (unchanged from the
previous year). The expense for medical care costs in the
financial year 2011 was € 9 million (2010: € 10 million).
The provisions for the medical care of employees in the
USA compare with reimbursement claims of € 11 mil-
lion (2010: € 8 million) recognised in accordance with
IAS 19.104A.
Post-employment benefit plans are classified as either
defined contribution or defined benefit plans. Under de-
fined contribution plans, an enterprise pays fixed con-
tributions into a separate entity or fund and does not
assume any other obligations. The total pension expense
for defined contribution plans of the BMW Group
amounted to € 40 million (2010: € 30 million). Employer
contributions paid to state pension insurance schemes
totalled € 400 million (2010: € 406 million).
Under defined benefit plans, the enterprise is required
to pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded,
the latter sometimes covered by accounting provisions.
Pension commitments in Germany are fully covered
by assets contributed to a separate fund in conjunction
with a Contractual Trust Arrangement (CTA). Obliga-
tions not covered by assets held by the fund are covered
by pension provisions. The main other countries with
funded plans were the UK, the USA, Switzerland, the
Netherlands, Belgium, South Africa and Japan.
Pension obligations are computed on an actuarial basis
at the level of the defined benefit obligation. The actuarial
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