Pension increases
Once in payment, your pension increases on 1 April each year.
Parts of your pension may receive different increases:
- Pension you built up before 1 January 2008 goes up each year in line with inflation up to 5% (apart from any GMP element).
- Pension you build up from 1 January 2008 with 7% contributions goes up each year in line with inflation up to 3%.
- Any pension you build up with 8.5% contributions will go up each year in line with inflation up to 5%.
To give a simple example, say you have five years of pensionable service before 1 January 2008 and five years after (with 7% contributions). Once your pension starts, half your pension (not counting any GMP ) increases in line with inflation up to 5% and the other half in line with inflation up to 3%.
So, if inflation is 4% in the first year of your retirement, half your pension goes up by 4% and the other half by 3%.
Please note that you will only receive higher increases on pension you have built up with 8.5% contributions in years when inflation is above 3%. So, in a year when inflation is 4%, any part of your pension you built up with 7% contributions increases by 3% that year. Any part of your pension you built up with 8.5% contributions increases by the full 4%.
So, if your overall pension from your 10 years’ pensionable service is £4,000 a year in the first year of your retirement, this is the effect of 8.5% contributions on your pension:
| Your pension increases (assuming inflation rate is 4%) |
Contribution rate | |
| 7% | 8.5% | |
| For 5 years’ pension before 1 January 2008 | £80 | £80 |
| For 5 year’s pension from 1 January 2008 | £60 | £80 |
| Total pension increase | £140 | £160 |
However, if inflation is lower than 3%, you receive the same increase as a member on the 7% contribution level, even though you chose 8.5% contributions.
So, if inflation was 2.5%, the 8.5% contributions would make no difference to the increase the example pension receives:
| Your pension increases (assuming inflation rate is 2.5%) |
Contribution rate | |
| 7% | 8.5% | |
| For 5 years’ pension before 1 January 2008 | £50 | £50 |
| For 5 year’s pension from 1 January 2008 | £50 | £50 |
| Total pension increase | £100 | £100 |
Discretionary pension increases
As noted above, under the Rules of the Fund, pensions for pensionable service in the Fund before 1 January 2008 are generally guaranteed to increase annually in payment, linked to rises in the Retail Prices Index (RPI) up to 5%. Any increases granted in excess of 5% are entirely at Unilever's discretion. Unilever has, in the past, exercised this discretion to grant annual increases to such pensions above 5% at times when it was sensible and affordable to do so. With effect from April 2011, whilst Unilever retains the power to grant discretionary increases to pensions in payment and will continue to consider carefully each year whether it is appropriate to exercise that discretion, you should not expect annual discretionary increases to be granted in the future.
You should also not expect that discretionary increases will be granted for pension built up since 1 January 2008 (whether you choose the 7% or 8.5% contribution level).