Unilever fund hits back in indexation dispute
NETHERLANDS - Progress, the €4bn Dutch pension fund of Unilever, has lashed out at allegations from members, who have suggested it is not making enough payments, by arguing its indexation policy has not changed.
The Participants Council of the fund publicly announced last week they had started legal proceedings about the indexation policy of Progress, claiming recent changes to fund rules will limit the increase in pensions to less than the full price of inflation.
Unilever has now commented: "The suggestion that the indexation policy has been changed is incorrect," further claiming "for many dozens of years the same index has been used as the criterion for the indexation policy, which has been successfully implemented to make the pensions inflation-proof".
Progress continued: "This relates to the CPIa index, or the ‘adjusted price index', which was specially developed for this purpose by the Dutch Central Bureau of Statistics (CBS)."
Both the CPIa criterion for indexation and the efforts to make the pensions inflation-proof have remained unchanged, maintains the fund.
"The criterion that is used is based on the advice of the Social Economic Council (SER) and is applied by many pension funds in the Netherlands," said Progress.
According to the fund, it values inflation-proofing of pensions, and has thereby "explicitly" taken this into account in the financing relationship with Unilever.
Progress also thinks there is no question of a decrease in the purchasing power of the pensions: because of indexation on the basis of the index that is applied, purchasing power is maintained.
The fund adds, however, while the change in its pension rules was needed to comply with new legislation, it does not bring any change to the indexation of the pensions in course of payment or a possible maximum limit.
"The parties that decide on the indexation promise are the same as before, namely Unilever and the trade union organisations. In 2006 these parties confirmed the indexation policy, based on the CPIa as the criterion."
There is no question of compulsory additional contributions being paid by Unilever into its Dutch pension fund, regardless of the outcome of the legal proceedings, concluded Progress.
The legal hearing on this matter will begin on March 27 in Amsterdam's Enterprise Chamber. If lost by Unilever, the firm may need to put an additional €80m into the fund, lawyers have been quoted as saying.
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