The formation of COUP in 1997 arose when the assets of the Unilever UK Pension Fund were greater than necessary to meet all its commitments. The company gave itself and its employees a “holiday” from making contributions to the fund and the cash that was released was spent in other ways. In this situation a nucleus of pensioners felt strongly that they and their former colleagues and workmates should have seen a more substantial increase in their pensions than rises restricted to the retail price index.
As it was, the money that became available was used to improve profits and dividends at a time when the company was under-performing as well as to fund redundancies and restructuring. The unfair aspect, in the view of COUP’s founders, was that the surpluses in the fund had arisen partly from the contributions they and their colleagues had made to it during their working lifetimes and, therefore, the surplus should have been used in part to fund more generous increases to existing pensions.
A particularly worrying aspect of the situation is that when the actuaries made their calculations and declared a surplus of funds they did not take into account the fact that people were living longer! Consequently, the contributions holidays were based on figures that were both inaccurate and misleading. When the stock market subsequently crashed the fund ended up with an even bigger deficit than it would have been if the basis of the original calculations had been realistic.
At today’s values, Unilever benefited from about £1.5 billion out of the fund but, in the last few years, has only returned less than half that sum in extra contributions.
