UNILEVER UK PENSION FUND

Pension tax allowances

This is a complex area of personal taxation and while the information on this page may help you make informed choices about your pension savings, if you are unsure you should seek independent financial advice.

The Annual Allowance is the yearly amount of tax efficient pension savings you can build up in registered pension schemes before a tax charge arises.

From 6 April 2016, the Annual Allowance depends upon your taxable income. Broadly, if your taxable income is less than £110,000, then you will continue to have a £40,000 Annual Allowance, but if it’s above that amount, your personal Annual Allowance could be lower and can reduce to a minimum of £10,000 for employees with taxable income above £210,000 a year.

Click here to download more information and examples.

The Lifetime Allowance is the total amount of registered pension scheme benefits you can build up over your working life before a tax charge arises and is usually tested when you access your pension savings.

From 6 April 2016, the Lifetime Allowance is £1 million and will increase annually in line with inflation from April 2018.

There are tax protections available to enable you to maintain a higher personal Lifetime Allowance. Click here to download more information and examples.

Managing the Allowances

If you exceed the Allowances, then your pension savings could be subject to an Annual Allowance tax charge and/or a Lifetime Allowance tax charge. Whilst some members want to avoid the tax charges completely, and may opt out of the UUKPF in order to avoid them, others accept them and, usually with the help of independent financial advice, allow for them in their financial planning.

For certain employees who would like to manage their Lifetime Allowance and/or Annual Allowance position by opting out of the UUKPF and ceasing to build up further pension savings, Unilever offers an alternative salary supplement (the Unilever Cash Alternative and Risk Benefits Scheme). Click here to download more information.

Opting out of the UUKPF is an important decision and the key question to consider is whether the value of the pension savings after allowing for the impact of any tax charge is more valuable to you than the alternative salary supplement.

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