Christmas surprise at PSA: the company reforms its pension regime

PSA suddenly announced the change of its French supplementary guaranteed benefits “retraite chapeau” pension scheme, a measure promising 34 million euros in savings in the 2015 accounts, an amount to be redistributed to group employees.

With falling interest rates the defined benefits pension service provision becomes far too expensive.  The Macron bill also   reformed by capping the annual acquisition of rights to 3% of final salary with an introduction of performance conditions.

The new defined contribution pension system PSA therefore pay an annual amount directly related to the Group performance, and the company indicates that the charge for the CEO retirement will be divided by more than three. ”

An exemplary case!

This hot “hat retirement” issue had taken particular importance at PSA with that of the previous CEO Philippe Varin. The 21 million provisioned called an avalanche of criticism in 2013 when the company was in the process of setting up a heavy downsizing plan. Facing the media pressure, Philippe Varin announced he renounced the device, and then had it’s unglamorous, accepted a more modest € 300,000 per year additional pension.

Proxinvest, which recommended in 2014 a reform of these pension regimes, criticized the directors of this company who had never considered the comments made each year by the proxy analyst at the AGM. The Executive Board, chaired by Carlos Tavares, will submit the new regime to the vote of shareholders at the general meeting in April 2016 and decided “to distribute to all employees the savings related to the pension plan for managers”

Merry Christmas to all!

Posted by Proxinvest, the French partner of ECGS, on December 22, 2015