05 March 2007
Unilever has announced that it plans to close its final salary
pension scheme to new members, whilst existing employees will have
to increase their contributions by 40 per cent if they wish to
remain within the scheme.
The company says it had decided to close the scheme to give it
"greater certainty" about the cost of its future pension
provision.
At the moment 7,000 staff are in the scheme, paying 5% of their
salaries in contributions each year. A less generous scheme will be
introduced for new joiners later this year, after consultation with
the scheme's trustees and staff.
New joiners will be offered membership of a hybrid scheme, in
which their pension will be related partly to their average salary
during their service with the company, for earnings up to
£35,000 a year. For earnings above that level, they will have
a money purchase personal pension pot, into which Unilever will
contribute 12.5 per cent of an employee's earnings. Employees will
contribute 5 per cent of their earnings up to £35,000, beyond
which they will make no contributions.
As of January 2008, existing members will be asked to increase
their contributions into the final salary scheme from 5 to 7 per
cent of their gross monthly salaries, or be switched into the less
generous hybrid scheme. For pensions earned after 1 January 2008,
inflation protection will be limited to just 2.5% a year, in line
with the minimum required by law.
Unilver said existing and deferred pensioners would not be
affected by the proposals, and denied the move was related to the
scheme's current deficit, which is around £2bn. The company
has agreed to make additional payments of some £310m into the
fund over the next 13 months, and plans to eliminate the deficit
entirely within the next eight years.
