Unilever trustees agree to scheme changes

The trustee board of the Unilever UK Pension Fund has agreed not to block changes to the scheme proposed by Unilever, its sponsoring employer, despite a wave of national strikes over the firm’s move to cease final salary accrual.

In a statement from the trustees - released this morning, just days after workers at the consumer goods¬ firm began 11 days of national strike action (PP Online, 18 January - www.professionalpensions.com/2139668) - the board said, while it did not welcome the move away from final salary, it would not oppose the changes and implement the proposals.

The proposals to cease final salary accrual and move existing members to Unilever's career average pension scheme required trustee consent.

The trustees said they had given "careful consideration" to all the matters they considered relevant - including the interests of all members as well as what it called the "legitimate objective" of Unilever to determine what it considers to be an appropriate and sustainable reward policy in a competitive market.

In the statement, Unilever UK Pension Fund Trustees chairman Liz Airey said:

"The trustee board has concluded that, following the proposed changes, the company will be providing pension benefits which compare favourably with those available to employees of many other companies that have moved wholly to defined contribution provision.

"Whilst it does not welcome the company's decision to cease final salary accrual, the trustee board has concluded it should not oppose it."

The statement also noted the trustees had managed to get the company to improve five elements of its original proposals:

- An improvement in the protection of accrued benefits for Final salary scheme members moving to the Career average scheme

- Members are also able to continue to build up defined benefits for future service for pensionable earnings up to approximately £48,000 (and this higher earnings limit will be linked to future increases in Unilever salaries)

- Benefits for existing members of the Career average section are to be improved in some respects including better increases to pensions in payment and a new voluntary contribution matching scheme

- Other improvements include, significantly a fairer approach to the new Life Expectancy adjustment Factor and better death in service benefits.

The trustee board said it would now be working with Unilever to complete legal formalities and agree the required changes to the UUKPF rules with effect from 1 July 2012.

It said the trustees would also be working with the firm to help ensure information is made available to its members to help them understand the potential impact of the changes and the options available to them.

This information will include: in March, a decision pack including information on the changes and information to help members navigate through the choices available to them; a modelling tool so that members can understand the potential impact of the changes; and in March/April, a series of roadshows at each of the company's sites.

The Unilever trustee board consists of 11 directors: an independent chair, five member-nominated directors and five company-appointed directors.

The member-nominated directors are drawn from the active, deferred and pensioner membership (one, one and three directors respectively), while the company-appointed directors are drawn from the active and pensioner membership (two and three directors respectively).