Unilever facing rebellion over pounds 800m pension fund surplus

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The Independent Online
Unilever, the Anglo-Dutch consumer goods giant, is facing a rebellion by pensioners at the group's annual meeting next month in a row over an pounds 800m pension fund surplus.

The pensioners' action group, the Committee of Unilever Pensioners, plans to challenge the company's decision to use about pounds 300m of the surplus from the fund, most of which will pay for a contributions holiday.

Their battle is the latest to highlight the controversial issue of how companies use, perfectly legally, surplus cash accumulated in pensions schemes.

Harley Boyd, a former senior manager with Birds Eye foods and a Unilever employee for 33 years, said the campaign to improve members' benefits was building up considerable support from the group's 40,000 pensioners. "I've spoken to employees who said they'd prefer to continue paying contributions to the scheme if it gives better pensions benefits at the end of it," he said.

Of the pounds 800m current surplus about pounds 220m was used to give the company and employees a contributions holiday while pounds 70m has this year gone to improve benefits to pensioners. Only those with pensions worth less than pounds 5,000 a year or the very elderly have received the full benefit of the extra cash.

The pensioners have also complained that they have no representation on the fund's 12-member board of trustees. Under the new Pensions Act Unilever has written to fund members asking them to vote to approve the way the scheme's 24 trustees are elected. Half are chosen by the company and half elected by "delegates" picked to represent the workforce.

Mr Boyd, 78, argued that this arrangement was undemocratic. "In effect the management get an in-built majority." At the agm in London on 6 May, the pensioners intend to raise the issue with the Unilever board. Unilever said it understood the pensioners' concerns but insisted the scheme had worked well for many years.

The row comes as two pensioners fighting a legal battle with the National Grid to recover pounds 46m removed from their pension fund may have to represent themselves in the High Court when the company begins its appeal next month against a ruling by the Pensions Ombudsman.

David Laws and Reg Mayes have been refused funding by the Grid and the trustees of the fund to hire a barrister for the appeal hearing, which has been set down for 19 May.

They have been told in a letter that the Pensions Ombudsman, who earlier this year, ordered the Grid to repay the pounds 46m of a pounds 70m surplus, may not be represented in court either. Unless the two pensioners are granted "pre-emptive costs" at a hearing before the High Court expected to take place next week, they will have to represent themselves.

The outcome of the appeal is crucial since if the High Court upholds the Ombudsman's ruling it could leave the electricity industry facing a pensions bill totalling more than pounds 1bn.

In a landmark ruling the Ombudsman concluded that the Grid had acted unlawfully by removing the surplus and distributing only 30 per cent of it to pensioners.

Meanwhile, in a linked hearing, National Power is due to appear in the High Court next month in a test case to establish whether it, too, acted lawfully in removing a similar surplus from its pension fund.