Unilever Contribution Arrangement
The Unilever Contribution Arrangement is a way of paying contributions into the Fund that allows you and Unilever to make savings on National Insurance, as well as the normal tax relief on pension contributions. This is how it works:
- Unilever normally pays an amount equal to your pension contribution straight into the Fund each month.
- Your pay is reduced by this amount and therefore the amount of National Insurance you and Unilever pay is reduced.
- You and Unilever only pay National Insurance on the reduced pay.
- As you do not receive this amount as pay you do not pay income tax on it.
The pay you would have been paid including the contribution amount is used to work out all your other benefits (this is sometimes called your ‘notional annual salary’). Unilever would also quote this higher salary figure if you were applying for a mortgage or loan.
The Unilever Contribution Arrangement has no effect on:
- How your pension is worked out;
- How much income tax you pay (tax relief applies to contributions whether they are made in this way or not); and
- Your death benefits.
You will normally take part automatically in the Unilever Contribution Arrangement, but if the reduction in your gross salary would bring it below minimum wage levels, you will not be eligible and Unilever will take you out of the arrangement.
You can choose not to take part in the Unilever Contribution Arrangement on joining the plan. You can also opt out from 1 October in any year as long as you have taken part for 12 months or more (you can find the UCA opt-out form here or contact us for a form). You might want to opt out if, for example, taking part would bring your gross salary below the level needed to qualify for some State benefits.
If you do not take part in the Unilever Contribution Arrangement, you can stay in the plan and contribute from your salary as normal - the tax relief will still apply to your contributions, but not the National Insurance saving.
Note: Opting out of the Unilever Contribution Arrangement only affects the way in which your pension contributions are paid – not your plan membership, as you would still join the Career average plan.