UK - Car giant BMW has revealed a £418m deficit in its £3.2bn UK final salary scheme despite moving over half of its assets into bonds two years ago.
But it stressed the scheme was not exposed to “any major risks” and will continue to be offered to all UK staff.
It said that it was able to keep the scheme open because of the “risk minimisation” policy it adopted in 2000 when it sold the bulk of its equity investments and moved to bonds.
The scheme – which covers thousands of former Rover Group employees, as well as the 4500 workers at the Mini plant near Oxford – switched 65% of its assets into fixed income, leaving it with a bond weighting of approximately 80%.
BMW chief financial officer Stefan Krause said: “Considering the lower risk position, we converted the large majority of fund assets in the year 2000 from stocks into fixed interest securities.
“This is why the stock market downturn did not affect us as much as other firms.”
But BMW admitted that under IAS19, the international version of FRS17, the scheme had a £418m deficit at the end of last year.
BMW’s move was made at around the same time as the switch by Boots, which sold its £1.7bn equities portfolio when the FTSE100 was at an average of 6000.
While others have shrunk in value due to markets, the Boots scheme has increased slightly and now stands £1bn higher than if it had not made the move.
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