What is the Unilever Contribution Arrangement?
The Unilever Contribution Arrangement is a way of paying contributions into the Unilever UK Pension 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 Unilever UK Pension Fund each month.
- Your pay is reduced by this amount.
- Tax relief applies to this amount – in other words, you do not pay income tax on it. So, if you pay the basic rate of tax (currenly 20%), each £1 contribution costs you just 80p. If you pay the higher rate (currently 40%), the £1 costs you 60p.
- You and Unilever only pay National Insurance on the pay you receive – so, your take-home pay will actually go up slightly.
The pay you would have received 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.
Final salary plan members can choose to opt out of the arrangement in April each year, or at other times if there is a significant change to their pay.
A small number of Final salary plan members may not benefit from the arrangement, if their pay is below the level needed to qualify for State benefits (or, if taking part would bring their pay below that level).
If you are in the Investing plan, you can choose whether or not to arrange contributions through the Unilever Contribution Arrangement. See the Investing plan section for more details.
Please note that Unilever has the right to change or amend the Unilever Contribution Arrangement and in some situations is not obliged to pay the amount equal to your contribution into the Unilever UK Pension Fund. For example, if the Fund has a surplus, which means that there is already more money in the Fund than the estimated amount needed to pay members' benefits.