Paying into the plan
Your account
If you take part in the Investing plan, you have an account in the Unilever UK Pension Fund in your name. You decide how you want to invest the account. You then choose when you retire how the value of your account is used to provide benefits. In any situation where you make no choice, a default option will apply.
Any extra contributions you or Unilever make will be credited to your account. There are two kinds of extra contribution to the Investing plan.
Fixed-term voluntary contributions
You make this type of extra contribution through the Unilever Contribution Arrangement – so you save on tax and National Insurance. Also, Unilever passes some or all of its National Insurance saving into your account.
Government rules for this type of arrangement, however, mean you must pay a regular amount and commit to it for at least 12 months. This period may actually be closer to two years – for example, if you start paying in November. In our plan, you will be able to change the amount you pay in fixed-term voluntary contributions every 1 October (provided you have paid them for at least 12 months).
Variable additional voluntary contributions
These contributions are outside the Unilever Contribution Arrangement. So, while there are still tax advantages, you do not save any National Insurance – or benefit from any National Insurance savings being passed on by Unilever. However, these contributions are more flexible – you can pay them regularly or as 'stand-alone' payments from time to time, and within limits you can vary what you pay more or less as often as you want.
So, your tax and National Insurance savings depend on:
- whether you pay fixed-term voluntary contributions or variable additional voluntary contributions; and
- the rate of tax you pay.
These tables show how this applies to a contribution of £100 (based on the tax and National Insurance rates in the 2010/2011 tax year).
If you pay fixed-term voluntary contributions:
| If you pay… | Actual cost to you | Amount invested in your account |
| Basic rate tax | £70.60 | £109.10 |
| Higher rate tax | £59.00 | £109.10 |
If you pay variable additional voluntary contributions:
| If you pay… | Actual cost to you | Amount invested in your account |
| Basic rate tax | £80.00 | £100 |
| Higher rate tax | £60.00 | £100 |
Note: no part of the '8.5% contribution rate' (see Paying into the plan) is an 'extra contribution' to the Investing plan – it is simply an alternative rate you can currently pay towards potentially higher pension increases.