To retire in dignity is a right of every working person, yet car giant BMW, which owns Mini and Rolls-Royce, would like to deprive its workforce of that right by eliminating one of the few remaining final salary schemes in the country. The response has been that more than 7,000 BMW workers are threatening industrial action over the German car-maker’s plans, with 96% indicating their willingness to take action in a consultative ballot.
Despite making record pre-tax profits of over 9bn euro (£7bn) in 2015, and reporting a 14% surge in pre-tax profits for the third quarter of 2016 over the same period the previous year, BMW has declared its intent to close its two defined-benefit pension schemes. It plans to end further contributions to the schemes from June and move workers over to its defined-contribution pension scheme that would see workers thousands of pounds per year worse off in retirement according to Unite the Union.
The company currently runs two defined-benefit pension schemes. One, the “old Rover scheme”, has 5,173 active members, 17,099 members who have left the company, known as deferred members, and 53,029 pensioners. The other defined-benefit scheme is much smaller, with 215 active and 450 deferred members, and 220 pensioners (figures from The Guardian).
The pension changes will impact workers at all of BMW’s British locations, including the plants at Cowley, Swindon, Farnborough, Hams Hall near Birmingham, and Goodwood near Chichester.
“BMW Group has always prided itself in providing excellent pensions for its staff,” said the company, “and wants to act now to protect future pension provision for all its staff and to help protect the cost competitiveness of the UK as a manufacturing base,” having citied “cost and risk” as making defined-benefit pensions “unsustainable and unaffordable”.
Tony Murphy, Unite the Union’s national officer for the automotive industries, said: “This is plainly unacceptable, and Unite will be fighting this proposal tooth and claw. It is becoming increasingly too easy for highly profitable multinational companies to energetically salami-slice workers’ pensions in pursuit of even greater profits.”
“BMW is blaming both the increase in national insurance payments and the cost of future liabilities as to why the final-salary pension has become unaffordable, though, ironically, profits are still rising in the last two quarters,” he added.
Defined-benefit pension schemes have been under attack for some time. Pensions are claims by retired workers on added-value produced by workers over their life-time, as part of the social contract in selling their capacity to work. Under defined-benefit schemes, pension funds are built up out of workers’ production of added-value, from which retired workers claim their company pensions. The company must continue to contribute a portion of the added-value produced by its workers to the pension fund so that the fund can sustain the claims of retirees for the rest of their lives.
Car workers have a right to their claims in the form of wages when active, and in the form of pensions when retired, by virtue of being the producers of this added-value during their working lives. Other, competing, claims on this added-value are taxes by the government and the claims of the owners of capital, profits in various forms. From the narrow perspective of BMW, it sees contributions to its defined-benefit pension funds as a drain on its bottom-line profit, despite its record figures. It therefore aims to turn away from its social responsibility to its active and retired workers in pursuit of its narrow private interests driven by competition.
A defined-contribution scheme, in distinction to a defined-benefit one, is essentially a savings plan. Unlike a pension in the true sense of the word, these savings plans let the company off the hook by making provision for retirement an individual matter. Once a worker retires, the company can wash its hands of responsibility to its former employee.
The monopolies and oligopolies in a more general sense have their interest in shifting from defined-benefit to defined-contribution schemes, i.e. from pensions to individual savings plans. As this change runs its course throughout the economy, it breaks down any thinking of pensions as a social programme provided as of right, linked to earnings with a national standard minimum, to individual savings for one’s retirement, as if guaranteeing a livelihood in retirement were a matter of personal choice. These plans are inherently insecure, typically invested in the stock market and subject to its vagaries, where now the individual bears much of the risk. Such savings plans are extremely lucrative for the financial oligarchy and are far more open to plunder.
Pensions must be viewed are a necessary modern social programme. Workers across the country are waging a struggle for retirement security for all at living standards they attained during their lifetime while working. Workers sell their capacity to work to owners of social wealth during their working years; in return, they expect to receive a national standard of living in sickness, injury and health from birth to passing away. That is the only acceptable arrangement under the capitalist system and governments are duty bound to guarantee retirement in dignity for all workers; otherwise, governments are not fit to rule. If they take further action, workers at BMW will do so knowing that they have stood up for future generations. The working class produces all the value in the economy in applying its labour to the material world and has the right to a decent standard of living under all circumstances.
Defend the pensions we have, defend pension rights for all!