Unilever closes pension scheme
by Elaine Frei
Consumer group Unilever (LSE: ULVR; Euronext: UNA; NYSE: UN) will soon become another of the two-thirds of UK firms to close their final salary pension scheme to new employees. A plan for new employees will be introduced later in the year. It is expected that the new plan will require that members pay 5 percent of their salaries each year on earnings up to £35,000 per year. In addition, the company will pay the equivalent of 12.5 percent into a “money purchase” portion of the scheme or the members can take that portion as a cash payout.
Currently, 7,000 employees of the company are members of the existing scheme. They pay 5 percent of their salaries each year into the plan, but have been told that beginning in 2008 they will have to contribute 7 percent to the scheme. If existing employees wish to avoid the higher contribution, they can join the new scheme. Those who take their pension after the beginning of 2008 will only have 2.5 percent inflation protection per year, which is the minimum allowed by law.
Unilever’s current scheme has 40,000 pensioners and 40,000 deferred members who no long work for the company but who have not yet retired. These members will not be affected by changes to the scheme.
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