Good practice and tools
# 05 at

Priority I-III

Priority II: managing an ageing workforce

Type of initiative

Level of implementation

Partners

Group work council, HR management

Launch of initiative

2012, ongoing

References

http://www.altersvorsorge-unilever.de/media/12456/one_pager_uzr.pdf
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Company pension scheme at Unilever in Germany

The Additional Company Pension Scheme of Unilever (UZR) was initiated by the Unilever work council (Konzernbetriebsrat – group works council) as a part of a demography project. In a joint social partner approach, Unilever management and works council agreed to create the UZR as a measure to ensure flexible transitions from working to pension life. An agreement was signed by management and works council. The UZR is an additional measure to existing statutory and collective agreement pension schemes.

Objective

The UZR basically is a capital saving agreement offered by Unilever.

  • The scheme gives employees the opportunity to make recurring or single payments out of their wages, overtime, bonuses or severance payments. Since the payments are free of tax and social security contributions and thereby reduce cost for the employer, the company adds an employer supplement of 13% of the payments (the amount he would normally pay in taxes and social security contributions).
  • Capital savings are subject to a guaranteed interest rate which is higher than the market rate at the starting point of the individuals saving agreement.
  • The payoff from the UZR is very flexible: single capital payment, temporary annuity or livelong annuity. Combinations are possible as well.
  • Employees have the flexibility to choose at which point of their working lives they wants to reduce working time or stop to work. A way to compensate for pension cuts in statutory pension payments, which apply to people choosing to finish work or to reduce working time before the age of 65.

Outcome and achievements

Examples how the UZR can be used for flexible transitions from working into pension life:

  • A) An employee starting to make payments in 2012 and reaching the age of 60 in 2025 could reduce his working time, resulting in a 500€ wage loss. This wage loss could be compensated by a five years annuity of 500€ per month out of the UZR.
  • B) An employee wants to retire at the age of 61 and can get a two years annuity of 950€ per month. A lifelong annuity of 100€ additionally pays for part of the pension reduction which applies because the employee stopped working at the age of 63 and not at the age of 65.

Costs: The costs for the employer supplement is financed by the amount saved for social security contributions.