Unilever Update: U.K Trade Unions Submit To New Pension Scheme

Unilever (NYSE:UL) can finally move ahead with its new pension scheme after the U.K. trade unions finally submitted to the company’s plan to scrap the previous final salary pension scheme to move to career average pension. Unilever faced a series of strikes over the past few months in the U.K. The revised scheme would now reduce employee pension costs for Unilever – the second largest consumer goods company in the world after Procter & Gamble (NYSE:PG).

View our detailed analysis for Unilever here

Last year, Unilever decided to adopt a new career average revalued earnings (CARE) scheme, after scraping the previous final salary pension scheme that the company claimed had become unsustainable. The new scheme is based on career average salaries and contributions instead of final salary pensions, and is expected to reduce Unilever’s pension costs up to 20%-30% for majority of its staff in the U.K.

The pension row began in April last year after the announcement of the pension shake-up, causing a wave of strikes in December and January in some of its U.K. production facilities. This was the first national strike in Unilever’s history in the U.K. affecting the company’s key personal care and food brands including Dove, Marmite and PG Tips. Employees that joined after 2008 have already been signed up with the new scheme, and the older employees will now shift to the new scheme in July this year.

We value Unilever with a $32 Trefis price estimate of its stock, almost in-line with the current market price.