BMW 2014 Annual Report Download - page 138

138
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124
Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
The increase in defined benefit obligations results
mainly
from the change in the discount rate used for the ac-
tuarial computation in Germany, the UK and the USA.
The provision for pension-like obligations for post-em-
ployment medical care in the USA and South Africa
amounts to € 57 million (2013: € 45 million) and is deter-
mined on a similar basis to the measurement of pension
obligations in accordance with IAS 19. Increased costs
do not have a direct impact on medical care obligations
relating to pensioners in the USA. In the case of South
Africa, however, it was assumed that costs would in-
crease in the long term by 8.3 % (2013: 8.1 %) p. a. The
expense recognised for obligations relating to post-em-
ployment medical care amounted to € 8 million (2013:
income of € 40 million).
Numerous defined benefit plans are in place through-
out the BMW Group, the most significant of which are
described below.
Germany
Both employer- and employee-funded benefit plans are
in place in Germany. Benefits paid in conjunction with
these plans comprise old-age retirement pensions as
well as invalidity and surviving dependents’ benefits.
The Deferred Remuneration Retirement Plan is an em-
ployee-financed defined contribution plan with a mini-
mum rate of return. The fact that the plan involves a
minimum rate of return means that it is classified as a
defined benefit plan. Employees have the option to
waive payment of certain remuneration components in
return for a future benefit. Any employer social security
contributions saved are credited in the following year
to the individual’s benefits account. The converted re-
muneration components and the social security contri-
butions saved are invested on capital markets. When
the benefit falls due, it is paid on the basis of the higher
of the value of the depot account or a guaranteed mini-
mum amount.
Defined benefit obligations also remain in Germany, for
which benefits are determined either by multiplying
a fixed amount by the number of years of service or on
the basis of an employee’s final salary. The defined bene-
fit plans have been closed to new entrants. With effect
from 1 January 2014, new employees receive a defined
contribution entitlement with minimum rate of return.
The assets of the German pension plans are administered
by BMW Trust e. V. , Munich, (German registered
asso-
ciation) in accordance with a CTA. The representative
bodies of this entity are the Board of Directors and the
Members’ General Meeting. BMW Trust e.V., Munich,
currently has seven members and three Board of Direc-
tors members elected by the Members’ General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be employees, senior
executives and members of the Board of Directors. An
ordinary Members’ General Meeting takes place once
every calendar year and deals with a range of matters,
including receiving and approving the association’s an-
nual report, ratifying the activities of the Board of Direc-
tors and adopting changes to the association’s statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employer-funded
combined with employee-funded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum recovery require-
ments. Benefits paid in conjunction with these plans
comprise old-age retirement pensions as well as inva-
lidity and surviving dependants’ benefits. These de-
fined benefit plans have been closed to new entrants,
who, since 1 January 2014, are covered by a defined
contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which act
independently of the BMW Group. BMW (UK) Trustees
Limited, Hams Hall, is represented by 14 trustees and
BMW Pension Trustees Limited, Hams Hall, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest-
ment strategies and plan amendments. Recovery
con-
tributions to the funds are determined in agreement
with the BMW Group.
USA
The BMW Group’s defined benefit plans in the USA are
primarily employer-funded and include final salary
pension plans and a post-retirement medical care plan.
Benefits paid in conjunction with these plans comprise