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IPE special report May 2018

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BMW mulls pension transfer

GERMANY - Munich-based luxury carmaker Bayerische Motoren Werke (BMW) has said it looking  at funding its pension liabilities externally, and may do so via a 'so-called ' contractual trust arrangement (CTA).

A spokesman for the company today confirmed BMW will transfer the €4.5bn pension assets in three steps to an external vehicle from next year.

He stressed no decision about the form of this vehicle has been made, though added a CTA is one of the options.

Industry sources told IPE last year BMW was mulling a move to a CTA, though the company has taken no further action since then. (See earlier IPE story: Flat equity allocation at German blue-chip)

A CTA is essentially a book-reserve funded programme which enables the corporate sponsor to leave pension assets integrated within the company's assets, though legally committing them to pension liabilities.

However, since last year's legislative changes have deregulated the external Pensionsfonds vehicle, several German blue-chip companies such as Siemens and MAN have already moved the CTA over to a Pensionsfonds.

Consultants expect a more widespread move to Pensionsfonds in the next year.

If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com

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