BMW 2002 Annual Report Download - page 83

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Pension provisions are recognised as a result of com-
mitments to pay future vested pension benefits and
current pensions to present and former employees
of the BMW Group and their dependants. Depending
on the legal, economic and tax circumstances pre-
vailing in each country, various pension plans are
used, based generally on the length of service and
salary of employees. Due to their similar nature, the
obligations of BMW Group companies in the U.S. for
post-employment medical care are also disclosed as
pension provisions. The provision for these other
post-employment benefit
obligations amounts to
euro19 million (2001: euro 21million) and is measured,
like pension obligations, in accordance with IAS 19.
In the case of post-employment medical care, it is
assumed that the costs will increase on a long-term
basis by 7% p.a. (2001: 5% p.a.). The expense for
medical care costs in the financial year 2002
amounted to euro 2 million (2001: euro 2 million).
Post-employment benefit plans are classified as
either defined contribution or defined benefit plans.
Under defined contribution plans, an enterprise pays
fixed contributions into a separate entity or fund and
does not assume any other obligations.The total
The salary level trend refers to the expected
rate of salary increases which are estimated annually
depending on inflation and the period of service of
employees with the Group.
In the case of funded plans, the defined benefit
obligation is reduced by the plan assets. Where the
pension expense for all defined contribution plans of
the BMW Group amounted to euro 11 million (2001:
euro 8 million).
Under defined benefit plans, the enterprise is
required to pay the benefits granted to present and
past employees. Defined benefit plans may be funded
or unfunded, the latter sometimes financed by
means of accounting provisions. Most of the pension
commitments of the BMW Group in Germany relate
to BMW AG, whose pension plans, like the majority
of other German enterprises, are unfunded and
financed by means of accounting provisions. In ad-
dition, a deferred remuneration retirement scheme
is in place, funded by employee contributions.The
main funded plans of the BMW Group are in Great
Britain, the USA , Switzerland, the Netherlands and
Japan.
Defined benefit pension obligations are com-
puted on an actuarial basis. This computation re-
quires the use of estimates.The main assumptions,
in addition to life expectancy, depend on the eco-
nomic situation in each particular country. The fol-
lowing weighted average values are used in Great
Britain (GB) and in the other countries:
plan assets exceed the pension obligations, the
surplus amount is recognised in accordance with
IAS 19 as an asset under miscellaneous assets.
Where the plan assets do not cover the pension ob-
ligations, the net liability is disclosed under pension
provisions.
001 BMW Group in figures
004 Report of the Supervisory Board
008 Supervisory Board
011 Board of Management
012 Group Management Report
031 BMW Stock
034 Corporate Governance
042 Group Financial Statements
106 BMW AG Financial Statements
112 BMW Group Annual Comparison
114 BMW Group Locations
116 Glossary
120 Index
in % Germany GB Other countries
31 December 2002 2001 2002 2001 2002 2001
Discount rate 5.8 6.0 5.4 5.8 5.8 5.9
Salary level trend 3.5 3.5 3.3 3.5 3.5 3.7
Pension level trend 2.0 2.0 2.4 2.5 2.1 2.5
[29]Pension provisions