150 Unilever staff have walked out of a Warrington factory in an effort to keep one of the last private sector schemes in the country open, with their union, Unite, telling Pension Funds Insider that the company can expect to face more anger in the weeks ahead for what it claims is a betrayal of its historic principals.
Unilever stems from William Hesketh Lever's soap business, established in 1886. Lever (pictured) was a renowned philanthropic 19th century industrialist, providing generous pay and housing for employees at his Port Sunlight factory.
Having set up a pension scheme for his workers at the end of the 19th century, Lever's maiden speech as an MP in 1906 called for the government of the day to introduce a state pension. Unite's national officer for food and drink Jennie Formby says Lever "stood for recognising and valuing his workforce, and we believe Unilever's latest pension changes go against the principles of their founding father."
The Anglo-Dutch food and detergent corporation has indicated that it plans to fully close its final salary scheme to 5,000 members and move them into a career-average equivalent from 2012. The defined benefit scheme was closed to new entrants in 2008 with an apparent promise not to make any more changes to the scheme, and ill-feeling has apparently developed in the workforce as bosses were said to be seeking advice on a full closure just 18 months after this step was made.
Unilever has also referenced its principles in defending the changes, with Unilever UK & Ireland chairman Amanda Sourry having told the press in April that the firm was committed to being a sustainable company in everything it did and that its pension arrangements were "no exception" to that rule.
"The changes have been proposed to help tackle the increasingly unaffordable and unsustainable costs associated with Unilever's UK pension fund," she said.
Sourry continued: "Going forward, one of the principles we want to establish is that both the responsibility and risks involved in saving for retirement are more equally shared between Unilever and its UK employees. Like many other companies which have already taken similar action, we must face up to this difficult issue now so we can continue to work to ensure Unilever remains a winning and competitive business in the UK."
Despite making a £580m contribution to close its deficit in recent years and seeing the funding level improve further due to a rise in assets rise in value by a substantial £1.2bn from 2009 to 2010, the pension fund has blamed rising longevity and future inflation assumptions for a similarly quick rise in liabilities. Liz Airey, chairman of the board in trustees said in the fund's 2010 report that "it is important to view this recent good performance in the context of previous poor performance".
Members are not yet convinced of the financial need to abandon the final salary link says Unite's Formby, who adds "this has made staff angrier than I have ever seen at Unilever". Formby told Pension Funds Insider "the fact that there are fewer final salary schemes around than there used to be is even more reason to hold onto this for as long as we possibly can."
A 90-day consultation period opened last week with 150 staff staging a walkout from its Persil factory in Warrington in order to demonstrate in the town centre. The first meetings of the consultation have focused on setting out procedure, but Formby claims "our members wanted to make their point very early on so that the company are under no illusions whatsoever that they are not going to give up without a fight".
Referring to strong corporate results and the £352,000 pension pot built up by Unilever CEO Paul Polman in 2010, Formby added that "the company (is) yet to make a solid financial case for the changes."
The company and unions are set for a showdown as they debate the changes at the next consultation meeting on 21 July. Formby said that she expects the anger of staff "to manifest itself a lot further in the coming weeks."
South Wirral Labour MP Alison McGovern is to meet a Unilever representative (Alan Walters, vice president of human resources) to discuss the changes after being lobbied by affected constituents. McGovern said: "I am very concerned about this announcement, and I am worried that it will disincentivise people from saving for their retirement if pension terms are changed so much".
First published: 13.06.2011
dbillingham@wilmington.co.uk
