BMW had, up until now, been one of the few remaining companies in the United States to still offer their employees pensions.
Also known as traditionally defined benefits, pensions allow for employees, once retired, to still receive a regular payment until their deaths.
Come July, however, BMW says it will switch to a “defined contribution plan” – in other words, switching to 401(k)s.
The move will freeze pensions for its US workers, including those working at the Spartanburg plant, although this will not affect those who’ve already retired.
BMW has already ceased offering pensions to new hires starting in 2012.
With this latest announcement, BMW is joining what has already been a long-term and widespread shift away from pensions in favor of plans that employees pay into through a percentage of their income, with companies typically matching employee contributions up to a certain amount.
BMW, through a spokesperson, said the move will reduce the company’s overall strategic risk.
Just in 2017, Michelin made the same move, freezing its employees’ pensions across the United States.
If your pension has been frozen, your best bet is to take a new look at your retirement plan, because it’s likely you’ll get less money now, and experts say even with 401(k)s, it’s likely you’ll need to start saving more.
