PSA Peugeot Citroën to eliminate its defined benefit supplementary pension plan for executives and expects to save €34 million with the new scheme.
On the recommendation of the Chairman of the Managing Board, the Supervisory Board of PSA Peugeot Citroën has approved the principle of ending the defined benefit supplementary pension plan for members of the Managing Board and of the Group Executive Committee.
A new scheme based on a defined contribution model will be put in place. This means that the Company will no longer offer guaranteed levels of retirement income, but will pay out an annual benefit that is directly tied to the Group’s results and performance.
This new scheme will result in a €34 million saving – less the transition costs – in PSA Peugeot Citroën’s 2015 accounts. It will also be much less costly for the Group in the longer term. For example, the expense corresponding to the Chairman of the Managing Board will be reduced by more than two-thirds. In addition, the Board has decided to redistribute the savings generated by the new executive pension plan to all employees, to top up existing compensation and profit-sharing schemes.
Consulted prior to the implementation of the plan, the AFEP-MEDEF high committee on corporate governance ruled that this plan complied with the recommendations set out in the AFEP-MEDEF corporate governance code for listed companies. Shareholders will vote on the related measures at the next Annual Shareholders’ Meeting in April 2016.
Commenting on the announcement, the Chairman of the Supervisory Board said: “The Chairman of the Managing Board and I strongly believe that it is essential to make changes to the supplementary pension plan in the current economic climate. The new scheme will be more transparent, less costly and more directly tied to the Company’s financial performance.”
Information about the new pension scheme is available on the PSA Peugeot Citroën website.
