Unilever trustees back pension changes
Consumer goods manufacturer Unilever has been given the backing of its trustee board for proposed changes to its pension scheme.
The company’s employees are currently involved in strikes against the proposal to close its final salary pension scheme.
In a statement the trustees said: “Whilst the trustee board does not welcome the company’s decision to cease final salary accrual, it has concluded it should not oppose it.”
Unilever will now be able to go ahead with plans to move existing members of its final salary accrual scheme to a career average pension scheme.
Trustees have secured several improvements including better protection of accrued benefits for final salary scheme members moving to the Career average scheme.
Final salary scheme members will also be allowed to continue to build up defined benefits for future service for pensionable earnings up to approximately £48,000.
Members of Unilever’s career average pension will also benefit from the trustee’s recommendations, as increases to pensions in payment will be improved and a new voluntary contribution matching scheme will be introduced.
Earlier this week the Government announced controversial plans which could help to protect final salary schemes.
With just one in five final salary schemes still open to new member, pensions minister Steve Webb is considering whether the schemes’ inflation ‘link’ should be removed.
Final salary pensions are guaranteed to rise by the cost of living each year and removing this link to inflation would save companies around £7 billion and could help to save schemes at risk of closing.
However, it would also substantially cut payouts for the two million active savers in final salary schemes.
The cost of the inflation guarantee is growing rapidly because of increased life expectancy.
The Department for Work and Pensions said that the rule change is being considered but no decision has yet been made.