BMW 2013 Annual Report Download - page 187

187 STATEMENT ON CORPORATE GOVERNANCE
employment relationship was ended before expiry of
the agreed contractual period (except where caused by
death or invalidity). Special rules apply in the case of
death or invalidity of a Board of Management member
before fulfilment of the holding period.
Retirement and surviving dependants’ benefits
The provision of retirement and surviving dependants’
benefits for Board of Management members was
changed to a defined contribution system with a guar-
anteed minimum return with effect from 1 January
2010. However, given the fact that board members ap-
pointed for the first time prior to 1 January 2010 had
a legal right to receive the benefits already promised to
them, these board members were given the option to
choose between the previous system and the new one.
In the event of the termination of mandate, Board of
Management members appointed for the first time prior
to 1 January 2010 are entitled to receive certain defined
benefits in accordance with the old pension scheme rules.
Pensions are paid to former members of the Board of
Management who have either reached the age of 65 or,
if their mandate was terminated earlier and not ex-
tended, to members who have either reached the age of
60 or who are unable to work due to ill health or acci-
dent, or who have entered into early retirement in
ac-
cordance with a special arrangement. The amount of the
pension is unchanged from the previous year and com-
prises a basic monthly amount of € 10,000 or € 15,000
(Chairman of the Board of Management) plus a fixed
amount. The fixed amount is made up of approximately
€ 75 for each year of service in the Company before
be-
coming a member of the Board of Management plus
between € 400 and € 600 for each full year of service on
the board (up to a maximum of 15 years). Pension pay-
ments are adjusted by analogy to the rules applicable for
the adjustment of civil servants’ pensions: the pensions
of members of the Board of Management are adjusted
when the civil servants remuneration level B6 (excluding
allowances) is increased by more than 5 % or in accord-
ance with the Company Pension Act.
When a mandate is terminated, the new defined con-
tribution system provides entitlements which can be
paid either (a) in the case of death or invalidity as a one-
off amount or over a maximum of ten years or (b) on
retirement – depending on the wish of the ex-board
member concerned – in the form of a lifelong monthly
pension, as a one-off amount, in a maximum of ten
annual instalments, or in a combined form (e. g. a com-
bination of a one-off payment and a proportionately
reduced lifelong monthly pension). Pensions are paid
to former members of the Board of Management who
have either reached the statutory retirement age for the
state pension scheme in Germany or, if their mandate
had terminated earlier and had not been extended, to
members who have either reached the age of 60 or are
permanently unable to work, or who have entered into
early retirement in accordance with a special arrange-
ment. In addition, following the death of a retired board
member who has elected to receive a lifelong pension,
60 % of that amount is paid as a lifelong widow’s pension.
Pensions are increased annually by an amount of at
least 1 %.
The amount of the retirement pension to be paid is de-
termined on the basis of the amount accrued in each
board member’s individual pension savings account.
The amount on this account arises from annual contri-
butions paid in plus interest earned depending on the
type of investment.
Depending on the length of membership in the Board
of Management and previous activities, the annual con-
tribution to be paid amounts to between €350,000 and
€400,000 (2012: €300,000) for each member of the Board
of Management and €700,000 (2012: €525,000) for the
Chairman of the Board of Management. The contribu-
tions are credited, along with interest earned, to the per-
sonal savings accounts of board members in monthly
amounts. The guaranteed minimum rate of return p. a.
corresponds to the maximum interest rate used to
cal culate insurance reserves for life insurance policies
(guaranteed interest on life insurance policies). A Board
of Management member entering office at 50 years of
age
and serving as member of the Board of Manage-
ment to the age of 60 can reckon on a retirement savings
capital of €4.2 million.
In the case of invalidity or death, a minimum contribu-
tion of the potential annual contributions will be paid
until the person concerned would have reached the age
of 60.
Contributions falling due under the defined contribution
scheme are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob-
ligations to employees.
Income earned on an employed or a self-employed
basis up to the age of 63 is offset against the pension