Contributions
Your contributions are 7% of your pensionable salary above the lower earnings limit.
You may have the option to increase your contributions to 8.5% of your pensionable salary above the lower earnings limit (this is currently available until December 2010). Any pension you build up with ‘8.5% contributions’ will receive potentially higher increases once in payment:
- Pension you build up while paying 7% contributions will increase in payment in line with inflation up to 3% a year.
- Pension you build up while paying 8.5% contributions, will increase in payment in line with inflation up to 5% a year.
Tax advantages
The real cost to you is lower than 7% (or 8.5% if it applies to you), because of the tax advantages that apply to your contributions.
Tax relief applies to your contributions at your highest rate of tax. So, if you pay the basic rate of tax (currently 20%), every £1 contribution you make only costs you 80p. If you pay the higher rate of tax (currently 40%), the same £1 contribution only costs you 60p.
Unilever Contribution Arrangement
As a plan member, you take part in the Unilever Contribution Arrangement unless:
- you choose not to; or
- your Unilever pay is less than £5,200 a year (because you work part-time, for example).
Broadly speaking, this means that Unilever pays directly into the Unilever UK Pension Fund an amount equal to the contributions you would otherwise have paid (instead of you paying them out of your salary). You agree that your pay is reduced by the same amount. This allows you and Unilever to make National Insurance savings on the amount. For further information about how this works see What is the Unilever Contribution Arrangement?
Unilever contributions
Unilever pays the running costs of the plan, and the balance of the amounts needed to provide the plan benefits not covered by the members’ contributions.
This means that Unilever’s contributions vary from time to time. Each time the plan undergoes a ‘valuation’ (a regular ‘healthcheck’ on its finances), Unilever and the Trustees agree the level of contributions Unilever should pay.