the pension fund of Unilever Nederland The Progress Pension A quick Overview

Transcription

1 the pension fund of Unilever Nederland The Progress Pension A quick Overview

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3 Contents Introduction 4 Your pension scheme: the main features 4 Three types of pensions 4 The Progress Pension is a supplementary pension 5 The Progress Pensioen offers certainty and flexibility 5 Your Progress Pension 6 Accruing old-age pension based on career averate pay 6 Who pays the contribution? 7 Survivor s pension 8 Pension facilities in event of incapacity for work 9 Retiring? Choose a tailor-made pension! 11 What will happen if you Indexation: increase in accrued pension 14 Procedure for complaints and disputes 15 Communication 16 Information 16 Any questions? 17

4 Introduction Your pension scheme: the main features You are a participant in the Progress Pension, the pension scheme for employees of Unilever in the Netherlands. The Unilever pension scheme is based on what is known as a career average pay scheme. This means that your pension is calculated on the basis of the average salary you earn during your career at Unilever. Unilever feels it is important that you accrue a good pension, a pension that you can count on when you reach age 65. Or earlier, since the possibility exists of retiring from Unilever before you reach 65. In addition to the oldage pension, Progress provides pension facilities in the event of your death and incapacity for work. Pension Rules In this brochure we set out the main features of the Unilever pension scheme. To make things simpler for you, we will not go into all the details of the scheme. We will explain your pension scheme and give a number of calculation examples printed in the green banner at the bottom of pages For a full description of the Progress Pension we refer you to the 2007 Pension Rules, which can be found on our website. We can also send you a copy at your request. The pension rules contain a detailed description of your pension rights. Your Progress pension fund In the Netherlands, pension schemes can be implemented by an insurer, an industry-wide pension fund (for an entire industry, e.g. the building industry or the metal industry) or a company pension fund. Just like many big companies, Unilever has its own pension fund: the Unilever Nederland Progress Pension Fund Foundation (in this brochure referred to as: Progress). Progress only implements the pension scheme for (former) emplo yees of Unilever Nederland. This means that Progress administers the pension contributions paid in by you and your employer. In addition, Progress handles all communication about the pension scheme and also handles the payment of your pension. Three types of pensions When you enter into service of Unilever Nederland, you immediately start to accrue pension via Progress. The old-age pension enters into course of payment when you reach age 65, and is paid out to you until you die. But your pension scheme has more to offer. In the event of prolonged incapacity for work, your pension accrual is (partially) continued; in such case you may possibly also qualify for a disability pension from Progress. In addition, the Progress Pension provides for a survivor s pension for your partner and/or child(ren) in the event of your death. 4

5 the basis may be provided by the government, and be supplemented by your emplo yer. In some cases you may receive an Anw (Surviving Dependants Act) benefit from the government in the event of your death. The Progress survivor s pension supplements this Anw benefit. (For more details see Survivor s Pension on page 8.) The Progress pension therefore consists of: Old-age pension; Survivor s pension in the event of your death; Pension facilities in the event of incapacity for work. We will deal with these three pensions in more detail later on in this brochure. The Progress Pension is a supplementary pension In the Netherlands, pensions consist of three parts. The basis of your old-age pension is provided by the government, known as AOW. You accrue a supplementary old-age pension via your employer (Progress Pension). In addition you can voluntarily ensure extra income. For instance by taking out an annuity insurance with an insurer, or via a tax-efficient blocked bank savings account. The Progress survivor s pension and the Progress disability pension work approximately in the same way: In the event of incapacity for work, the WIA benefit from the government is the basis. This may be supplemented by a disability pension from Progress. (For more details see Pension Arrangements in the Event of Incapacity for Work on page 9.) The Progress Pension offers certainty and flexibility Thanks to the Progress Pension you can count on an income as from the moment that you reach age 65. That offers certainty. But you can also make personal choices for your retirement pension. Although the official pensionable age is 65, it is possible to stop working before that age. And you can opt at the moment of your retirement to swap the survivor s pension that you have accrued for a higher old-age pension. The Progress Pension also offers a number of other possibilities. In part, therefore, you decide for yourself what your pension will look like after your retirement. That s flexibility! Let us first show you below how your Progress Pension works. Then we will return in detail to all the possible choices. (See Retiring? Choose a tailor-made pension! on page 11.). 5

6 Your Progress Pension Accruing old-age pension based on career average pay Each year you accrue pension rights, depending on the salary you earned in that year. The average salary you earned during your career therefore determines the level of your total pension. We call this a benefits contract that operates on the basis of the career average pay system. Each year you accrue 1.88% of your pensionable pay (see Pensionable pay and franchise on the opposite page) in the form of pension. For instance, over a period of forty years, you accrue via the Progress Pension a pension that amounts to 75% of your average pensionable pay. The level of your pension accrual therefore depends on your salary during your career at Unilever and the number of years you were employed by Unilever. So your pension accrual does not depend on the investment return that Progress makes on the contributions deposited. The old-age pension enters into course of payment on the first day of the month in which you reach age 65. In addition to the Progress old-age pension you will receive a Dutch state pension; AOW. This will commence at age 67 generally. In principle, your accrued Progress Pension is increased each year by the percentage by which the Collective Labour Agreement (CLA) wages at Unilever have increased. We call this indexation. You can read more about this on page 14. Career average pay scheme with indexation Year 1 Year 2 Year 3 pension accrual in one year increase in pension accrual (indexation) An example: Old-age pension Karin wants to calculate how much pension she will accrue in Her salary is 32,469 euro gross per year (including holiday pay and shiftwork bonus). Pension-related salary 32,469 euro Franchise 13,469 euro -/- Pensionable pay 19,000 euro In 2014 Karin accrues 1.88% of 19,000 euro, i.e. 357 euro. 6

7 Pensionable pay and franchise In the accrual of the Progress Pension we look at your pension-related salary: your basic gross annual salary, including holiday pay and shiftwork bonus. From this amount we deduct the franchise (13,469 euro in 2014); what is left over is your pensionable pay. In other words: pension-related salary minus franchise = pensionable pay. The franchise is the part of your salary over which you do not accrue pension. In fact it is for this part that you receive an AOW pension from the state. The level of the franchise is determined by Unilever and the trade union organisations and is approximately at the minimum level that is permitted by the government. A low franchise works to your advantage; in fact, it means that you accrue pension over a bigger part of your salary. Who pays the contribution? The costs for the Progress Pension are substantial. It has been agreed that Unilever will bear these costs but that it may charge part of the costs to the employees. For the employees the pension contribution amounts to a maximum of 5% of the pensionable pay. The level of the employees contribution is determined by Unilever and the trade union organisations during the negotiations on the terms of employment. In 2013 this contribution was 0.5% of your salary between the franchise of 13,469 euro and the salary threshold of 65,604 euro; above this salary threshold your employees contribution was 3% in Pension-related salary basic salary including holiday pay and shiftwork bonus Pensionable pay 13,469 (in 2014) If Karin were to remain in Unilever service for another 35 years and were to keep on earning the same salary, she would therefore accrue 35 x 357 euro = 12,500 euro in the form of pension. This means that as from age 65 she will have an old-age pension of 12,500 euro gross per year. Alongside this she will also receive any pension that she has accrued with another employer. Obviously, Karin s salary does not stay the same for 35 years. The pensionable pay is also calculated again each year. But by adding together the pension accrual for all the years you have worked, you can calculate the total Progress Pension per year. Part-time work and pension accrual If in this example Karin did not work full-time but, say, for 60%, then the pension accrual in this year would be 60% of 357 euro, i.e. 214 euro. 7

8 Your Progress Pension Survivor s pension If you die while employed by Unilever, your partner* will receive a life-long partner pension from Progress. In principle this partner pension amounts to 70% of the old-age pension that you could have accrued up to age 65. The basis for this calculation is your salary at the moment of your death. If you are no longer in Unilever s employment at the moment of your death, your partner is entitled to 70% of the old-age pension that you had accrued until the time when you left Unilever. Partner pension The partner pension may be a supplement to the state Anw benefit. In many cases, however, the surviving partner is not entitled to this benefit. You can take out a supplementary Anw insurance via Progress. For more information about this insurance we refer you to the special pension folder Supplementary Anw insurance (Aanvullende Anw-verzekering). At the moment you retire, you can opt for a different ratio between the old-age pension and the partner pension. Instead of 70% partner pension, for example, you can opt to swap this entire pension for a higher old-age pension. (See Retiring? Choose a tailor-made pension! on page 11.) Orphan s pension A child dependant can count on an orphan s pension. For each child this orphan s pension amounts to 20% of the partner pension. This percentage also applies upon death after retirement or leaving company service; in such cases, of course, only the partner pension that has been accrued is taken into consideration. The orphan s pension is paid out until the child reaches the age of 21. * This also includes your unmarried partner, provided that he/she has been notified to us via a cohabitation contract. We advise you to do this as quickly as possible. An example: Survivor s pension Kees wants to know how much the survivor s pension will be for his partner and daughter if he dies. Kees is 55 years old and earns 43,469 euro gross per year (including holiday pay and shiftwork bonus). The survivor s pension is derived from the old-age pension that has been accrued until the time of death and the old-age pension that could still have been accrued. In calculating the old-age pension that Kees could still have accrued, we look at the salary that he earned at the time of his death. To date he has accrued 12,000 euro in the form of pension. 8

9 Pension facilities in event of incapacity for work What happens to your income if you are (temporarily) unable to work because of illness or disability, and what happens to your pension accrual? If you are ill, you may be out of circulation for some time. For the first two years the employer is responsible for your income. At Unilever that is laid down in the CLA. If you are still incapable of working after those two years, you are given a medical examination. Depending on the outcome of the examination, you may then qualify for a benefit under the Work and Income according to Working Capacity Act (WIA). This act does not look at what you are no longer capable of doing because of illness or disability, but at what despite this handicap you are still able to do. Supplement to the WIA After two years you qualify for a WIA benefit if the results of the examination show that you are at least 35% incapable of working. If your incapacity for work is less than 35%, then you are not incapable of working according to the WIA. The WIA benefit offers you a percentage of your Pension-related salary 43,469 euro Franchise (in 2014) -/- 13,469 euro Pensionable pay 30,000 euro Old-age pension still to be accrued (age 55 to age 65, i.e. 10 years) euro * 1,88% * 10 5,640 euro Old-age pension accrued to age 55 12,000 euro + Total old-age pension 17,640 euro How much do Kees survivors receive? If Kees were to die now, his partner would receive 70% of 17,640 euro as partner pension, i.e. 12,348 euro gross per year. And his daughter would receive 20% of 12,348 euro as orphans pension until she reached the age of 21; this is 2,470 euro gross per year. 9

10 Your Progress Pension latest salary, subject to a maximum salary of 52,000 euro in If you are entitled to a WIA benefit, our supplementary disability pension facilities become applicable. Below we will explain these facilities for the two situations that may be applicable: you are in fact partially incapable of working or fully incapable of working. Fully incapable of working If the examination shows after two years of illness that you are fully incapable of working, Unilever terminates the employment contract. As from that moment you receive a WIA benefit. Progress then has the following two pension facilities: 1. Over the part of the salary in excess of 52,000 euro Progress pays out a disability pension of 65% until the age of 65 at the latest. 2. The accrual of the old-age pension and the partner pension is continued and is 70% of the pension that you had accrued just before the moment when you became incapable of working. For this you no longer have to pay any pension contribution. The pension accrual continues until you reach the age of 65, the moment when your old-age pension commences. Partially incapable of working You are partially incapable of working if, following the examination, the expectation is that you can still earn 20 to 65% of your former salary. For that part for which you are incapable of working you receive a WIA benefit. Progress supplements the WIA benefit as regards the part of the salary that exceeds 52,000 euro. This works in the same way as in the case of full incapacity for work, but in this case your Progress disability pension is dependent on the percentage for which you are no longer capable of working. If you remain in the service of Unilever*, the accrual of your old-age pension and partner pension will also continue in full until your retirement; this is where there is a clear difference from being fully incapable of working. The situation in the event of incapacity for work is complicated. In our pension folder Incapacity for Work (Arbeidsongeschikt) we deal with this in more detail. If you have any further questions about this, we advise you to call the Pension Infoline: An example: Incapacity for work pension Annelies becomes fully incapable of working and wants to know how high her income will be. Before she became incapable of working, Annelies earned 60,000 euro gross per year. From the state she receives a WIA benefit which is calculated on the basis of her salary up to 52,000 euro (maximum WIA salary ). This is 39,000 gross per year. From Progress she receives a supplement of 65% of 8,000 euro (60,000 minus 52,000 euro), which is 5,200 euro gross per year. In total Annelies has an income of 44,200 euro (39, ,200 euro) gross per year. Pension accrual in the case of incapacity for work In addition to the disability pension that she receives, her pension accrual is also continued. Annelies does not pay any contribution for this. * If you left Unilever, the accrual of your old-age pension and partner pension will continue for 70% until your retirement. The accrual applies only to the part for which you are incapable of working. 10

11 Retiring? Choose a tailor-made pension! The official retirement age for the Progress Pension is 65. In principle your old-age pension enters into course of payment on the first day of the month in which you reach this age. However, you have the possibility of having your Progress Pension commence before that. Your pension will then be lower. This is logical: the pension is accrued over a shorter period and it also has to be paid out over a longer period. You may retire as from age 55, but in practice we regard 60 as the earliest age for retirement. If you retire before age 60, the old-age pension will normally speaking simply be too low. Basically, the age at which you want to stop working is your first choice. After you have chosen a certain retirement age, you will receive shortly before your actual retirement a number of further possible choices. Bridging pension If you retire you do not yet receive AOW. This will commence at age 67, generally. This means that your income will decrease considerably until you reach the AOW pension age. To allow you financially to bridge over the period between your retirement and the AOW pension age, you can buy a bridging pension from Progress. In that case your pension will be higher untill the AOW pension age and then lower. You can choose between a bridging pension of 50, 75 or 100% of the maximum AOW (currently about 18,800 euro per year). More old-age pension, less partner pension Upon retirement your partner pension is in principle 70% of your old-age pension. You can choose to change this ratio. For example, you can swap the fully accrued partner pension for extra old-age pension. For instance, because you have no partner at that moment or because your partner has accrued a good pension of her/his own. Your pension benefit will increase Salary 60,000 euro Franchise (in 2014) 13,469 euro -/- Pensionable pay 46,531 euro In 2014 Annelies would have accrued 1.88% of 46,531 euro in the form of pension. This is 875 euro. But because she is fully incapable of work, she accrues 70% of 875 euro; this is 613 euro. 11

12 Your Progress Pension substantially as a result. Conversely, you can also swap a part of the old-age pension so as to increase the partner pension, up to a maximum of 100% of the old-age pension. You can find more information about this in the pension folder Retiring (Met Pensioen). First high, then low Lastly, you can make the level of your pension benefit variable within certain limits. For example, a higher pension during the initial years because you have major plans that cost a lot of money and after that a lower income. But you can in fact also choose to take it steady during the first years after your retirement with a lower pension followed by years with a higher pension benefit. All these choices allow you to tailor your pension to your needs. You can have us calculate what the consequences of your choices will be. You can find more information in the pension folder Retiring (Met Pensioen). 12

13 What will happen if you... Leave Unilever? As soon as you leave company service, the accrual of your Progress Pension will stop. It is not possible to continue your Progress Pension on a voluntary basis. You can leave the pension that you accrued to remain with Progress, but you also have the right to transfer the oldage and survivor s pension you have accrued with Progress to the pension administrator of your new employer (value transfer). This applies to both your old-age pension and your survivor s pension. The arrangements in the event of incapacity for work will lapse when you leave company service. More information about this can be found in the special pension leaflets Leaving service (Uit Dienst) and Incapacity for work (Arbeidsongeschikt). Get divorced? If you get divorced or your relationship ends, the partner pension that has been accrued until that moment is paid out to your ex-partner after your death. As a result, the partner pension of any subsequent partner is reduced. A divorce may also have consequences for your old-age pension. The old-age pension that you accrued during the relationship is in fact divided fairly between you and your ex-partner. That is laid down by law and we refer to it as pension equalisation. But you can in consultation with your ex-partner make other agreements about the division of your old-age pension. For example, agreeing not to divide the pension. If your relationship ends you are advised to call the Pension Infoline as soon as possible: (010) , and you will receive information specific to your situation. Wish to take out additional insurance? Some pension schemes offer employees the possibility of accruing extra old-age pension. Progress does not offer this possibility. If you want to improve your income in old age, you can do so by taking out a lifeannuity insurance from an insurer or opening a taxefficient blocked bank savings account. However, insurers and banks will charge you extra costs such as administration costs, brokerage commission and a profit mark-up. So make sure you receive proper information about this first! 13

14 Your Progress Pension Indexation: increase in accrued pension In the course of time, your accrued pension decreases in value due to inflation. That is why arrangements have been made to increase your pension. This is known as indexation. In doing this, we make a distinction between employees and former employees of Unilever, including pensioners. Indexation for employees during pension accrual For such time as you are an employee, Progress increases your accrued pension entitlements on the basis of the percentage by which the CLA wages at Unilever have increased. In doing so, we distinguish between the pension that was accrued over the salary up to about 75,000 euro (Regular pension) and the accumulated pension above that salary (Surplus pension). Indexation of Regular pension Each year on 1 January Progress increases the accumulated Regular pension according to the CLA wage develop ment at Unilever. This wage indexation is guaranteed until 1 January 2013, i.e. not dependent on Progress financial position. For the period as from 2014, Unilever and the trade unions still need to reach agreement. Indexation of Surplus pension For the pension accrual of the part of the salary that is in excess of 75,000 euro a different indexation rule applies. Here, too, efforts are made to give an annual increase on 1 January on the basis of the increase in the CLA wage. However, Progress investment results over the past five years will determine whether this can be achieved or that the indexation over this Surplus pension will be lower than the CLA wage increase. Indexation for pensioners after end of pension accrual Once the pension accrual has terminated as a result of retirement or leaving company service, we endeavour to increase the accrued pensions on 1 January of each year by the price inflation percentage. As our basis we take the Retail Price Index (derived) that is determined by the Central Bureau of Statistics (CBS) each year. The increase only takes place if the financial position of Progress so permits. In other words, this is a conditional indexation. The higher salaries are again subject to the different indexation rule as described above. The investment result of Progress taken over a five-year period may therefore mean that for the pension accrual over this part of the salary the indexation is lower than the price inflation. More information on indexation In our annual pension summary you can read how we indexed the pensions in the past three years and what our expectations are for the future. You can also find this information on our website, where you can also find a description of our indexation policy. 14

15 Procedure for complaints and disputes If you do not agree with the way in which the Rules have been applied in your case, you should contact Progress. If this does not lead to a solution, you can as a participant file an objection. In such case a dispute can be said to exist. If you are dissatisfied about the way in which you have been treated by Progress, you can file a complaint. On our website you can read the complete version of the procedure for dealing with complaints and disputes. 15

16 Communication Information Written information Progress takes care of communication with (former) employees and pensioners. Three times a year, for example, you receive Progress Nieuws, a newsletter with interesting information about your pension scheme and developments within Progress and the Dutch pensions industry. In addition we send you a statement of your current pension situation once a year. On the basis of this pension statement you can talk to a Progress employee during the individual pension information sessions at the location where you work. In the Jaarbericht (annual review), which is automatically sent to you each year, Progress reports on its investment results and the policy it has pursued. Personal pension information sessions Immediately after the annual pension statement is sent out, our Progress pension specialists visit all Unilever sites in the Netherlands to give information sessions. During these individual sessions you will have the opportunity to ask questions about your pension. Our Progress experts will be pleased to give you a general explanation of your pension, and to answer any specific questions you may have on subjects such as a pension gap, the survivor s pension and value transfer. Website Progress has its own website which contains all information about your Progress Pension: progress. Here you can find all the information you need about your pension scheme or our organisation. All communications that were previously sent to you including Progress Nieuws, all pension folders and the annual reports continue to be available via our website. What does Progress expect from you? You are obliged to provide Progress with all information which it requests and which is important for the implementation of the pension scheme. For example, if you want to register your unmarried partner, or if you end such a relationship. See also the pension folder Cohabitation (Samenwonen). Requesting information Al lot of information is automatically sent to you by Progress. You can also request information yourself from Progress, such as the Pension Rules and our brochures. These documents can also be downloaded from our website: 16

17 17 Any questions? The brochure The Progress Pension: a quick overview is an introduction to your pension arrangements. The pension fund is aware that you may possibly have questions about this information. In that case you can contact the Pension Infoline on (010) You can also send an pensioen-info.progress@unilever.com.

18 This brochure was compiled with the utmost care. The information in this brochure is an abridged and simplified version of the information provided in the Pension Rules. In the end the Pension Rules are leading. 18

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20 Stichting Pensioenfonds Unilever Nederland Progress Unilever debrug, Nassaukade 5 Rotterdam P.O. Box 2071, 3000 CB Rotterdam The Progress Pension forms part of the Unilever terms of employment package. January 2014