Tax

Pensions are a tax effective way to save.

When you save into a pension from your pay, you can get tax relief on the money you put in. This means you do not pay Income Tax on the money you save into your pension. You can also save on National Insurance by making extra voluntary contributions from your pay through salary sacrifice.

How much you save on tax and National Insurance depends on how you save into the Fund.

  • Variable extra voluntary contributions (regular or one-off payments) will save you Income Tax that will go into your pension pot.
  • Fixed extra voluntary contributions you set up will save you Income Tax and National Insurance that will go into your pension pot.

Find out more about making extra pension savings

You will only get tax relief on pension savings up to the value of your total earnings for that tax year.

Unilever will not let you save more than your Unilever earnings. They will check this amount to make sure that you are not saving more than you earn.

Unilever also limits how much you can save via salary sacrifice to make sure that your pay doesn’t drop below the minimum wage.

Tax limits on your pension savings

Annual allowance

The government sets a limit on the pension savings you can make each year without paying a tax charge. For most people this is currently £60,000 per tax year. It may be lower if you are a higher earner, or if you have taken cash or drawdown from a defined contribution pension scheme.

If you go over the annual allowance, you’ll have to pay a tax charge on any pension savings that you make over this limit.

Pension savings that count towards the annual allowance are:

  • Money you pay in to your Unilever pension pot
  • Money Unilever pays in on your behalf
  • Money paid (by you or anyone else) into any other pensions you may have

You are responsible for checking that all the money saved into your pensions over a tax year doesn’t go over the annual allowance.

We will let you know if your pension savings with Unilever go over £60,000.

More on the annual allowance

You can generally carry forward unused annual allowance from 3 previous tax years. The amount you can carry forward will change from year to year. This is because the value of the annual allowance has changed over the years. It can also be reduced if you earn above a certain amount. This means you need to check what annual allowance applied to you and how much of it was unused in each previous tax year when working out how much you can carry forward.

How carry forward works

If you do need to pay tax on money paid in over the annual allowance, you should contact the Fidelity Pensions Service Centre by email at pensions.service@fil.com or by calling 0800 3 68 68 68 or +44 (0)1737 838 585 if outside the UK.

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Tapered annual allowance

The annual allowance is reduced for very high earners. If your annual allowance is reduced you have what is known as a ‘tapered annual allowance’. The tapered annual allowance may also affect you if your income is high in a tax year (for example if you get a large lump sum due to redundancy).

Your annual allowance may be reduced if:

  • Your taxable income (ignoring any salary sacrifice) plus your Benefits Envelope is over £200,000 and
  • Your taxable income plus money paid into your pension (including by your employer) is over £260,000

If the tapered annual allowance does apply to you, your annual allowance will reduce by £1 for every £2 you are over the £260,000 limit. The lowest your annual allowance can reduce to is currently £10,000.

Working out your tapered annual allowance can be complicated, so you might want to get financial advice.

Tapered annual allowance

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Money Purchase Annual Allowance

If you start taking money from the Retirement Savings Plan or another similar pension scheme where your money is invested in your own pot, your annual allowance might reduce. The reduced annual allowance is called the money purchase annual allowance and is currently £10,000 a year. It applies to savings you make into defined contribution pension arrangements, like the Retirement Savings Plan. You’ll be told when you take the money if the money purchase annual allowance applies to you.

Money Purchase Annual Allowance

Tax limits on money paid out

As you get tax relief on the money you save into your pension, the benefits paid from the pension are usually taxable as income.

When you retire you can choose to take some of your pension savings (up to 25%) as tax-free cash. The maximum tax-free cash that you can take from all of your pension savings is normally limited to £268,275. Any cash that you take after that is likely to be taxed as income.

There is also a limit on the total tax-free cash lump sums that can be paid from all of your pension savings if you retire with serious ill-health, and/or to your loved ones when you die. For most members this limit is £1,073,100. This limit includes any tax-free cash taken at retirement. Any cash taken above £1,073,100 is likely to be taxed as income.

Cash lump sums paid if you die after age 75 or that are paid more than 2 years after we are told about your death are taxable as income.

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