Case study: Unilever sets clear objectives for plan
Unilever UK, which closed its final salary pension scheme to new employees in January 2008, has clear objectives for the plan.
At the same time, it also reduced the minimum amount by which it increases pensions in payment from a 5% cap to 3%. However, this cap is still above the 2.5% minimum set by the government.
Nigel Biggs, head of UK pensions at the consumer products firm, explains: “Our objective is to provide a competitive pension package for staff and to do that in a way that is sustainable for the business. Once the employee has retired and the pension is in payment, if inflation is running at above 3% then they will get potentially lower increases because we have lowered the cap from 5% to 3%.” However, this change only affects staff who are building up their pension fund after January 2008.
The firm has also raised staff contribution rates from 5% to 7%.