Unions hit out at Unilever pension cuts plans

By Dan Colombini

- Last updated on GMT

All employees will be invited to input into the formal consultation via their representatives and will be updated regularly throughout.
All employees will be invited to input into the formal consultation via their representatives and will be updated regularly throughout.

Related tags Finance

The Usdaw, Unite and GMB unions have slammed proposals from manufacturing giant Unilever to make wholesale changes to its pension plans.

The firm is proposing a new approach to its UK pensions and benefits to address the cost increases faced by the company of offering a Defined Benefit pension, and to better reflect employees’ modern-day needs for more flexibility in their pensions and benefits.

Unilever said the new plans would offer employees more choice. They would include the introduction of a Benefits Envelope for all employees – an amount of money, calculated in the UK as 25% of Pensionable Earnings (before tax is deducted).

Defined Benefits

Under the plans, the employee can choose how this will be used. For example, if they chose to remain in Defined Benefits, the cost to Unilever of providing this pension would be deducted from the employee’s Benefits Envelope. This would allow employees to choose how much they wanted to invest in pensions or elsewhere, according to the firm.

Additional changes to the Defined Benefit pension would enable Unilever to continue to offer the scheme to current employees, but would reduce the amount of Defined Benefit pension that employees earned each year. 

It would also see the closure of the Defined Benefit pension to new employees, replaced by a competitive Defined Contribution pension. Furthermore, the company would stop the use of an early retirement discretion, an enhancement made to employees’ pension upon early retirement.

The company has confirmed that it will be entering into consultation on these proposals with employee and trade union representatives in the UK and that no changes will be implemented before June 2020 at the earliest.

All employees will be invited to input into this formal consultation via their representatives and will be updated regularly throughout.


However, the plans have been universally condemned by the unions, which collectively said: “The company’s main justification for proposing to make changes is centred on the increasing costs of providing the scheme​.”

As a result, the organisations said that they cannot see any justification for the changes.

Daniel Adams, Usdaw national officer, said: “Unilever’s pension scheme is an incredibly well-valued part of our members’ terms and conditions.

“The joint trade unions are clear that we will not just watch the company remove and downgrade its pension provision​.”

Rhys McCarthy, Unite national officer, added: “The joint trade unions have serious concerns, not only in relation to the existing provision, but also that if closure of the scheme for new starters goes ahead, this will be the death knell for the scheme in its entirety in the medium term. Unilever also needs to be a company with purpose for its hard-working employees, otherwise its recent claims of only having ‘brands with purpose’ will come across as a cynical marketing ploy​.”

Eamon O’Hearn, GMB national officer, added: “The company cannot claim to be a market leader with initiatives like ‘brands with purpose’, then decide to follow the market in a race to the bottom in pensions – either Unilever wants to set the standard or follow the crowd. This proposal will look to many staff as a lazy shortcut to help achieve the 20% margin by the 2020 target the company has set itself, regardless of the fact it would create a two-tier workforce, resulting in unnecessary division and resentment across the entire UK business.”


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