In this short video we explain the basic principles of how a Career Average scheme works.

If you were actively employed by Unilever on 30th September 2021 you are eligible to build up benefits in the DB Career Average plan from 1st October 2021.

The pension you build up in the DB Career Average plan each year is based on a formula.

• The annual pension built up in a year is equal to: 1/80 x Pensionable Earnings up to the Upper Limit (the Upper Limit is £52,270 for the year from 1 October 2023 to 30 September 2024).
• The Upper Limit is reviewed each year, and will usually increase in line with 'Consumer Prices Index' inflation.
• Your pension is based on your pensionable earnings up to the Upper Limit and the pensionable service you build up in the Fund from 1st October 2021.
• Your pension receives some protection against inflation.
  • Inflation is the general rise in prices, normally measured by the 'Consumer Prices Index' - a figure taken from measuring how costs increase across a range of goods and services.
• You pay 5% of your pensionable earnings up to the Upper Limit into the Plan – and you do not pay income tax on the contributions you make.
• The remaining cost of the DB Career Average plan is met from your Benefits Envelope.
• For the year from 1 October 2023 to 30 September 2024 the cost of the DB Career Average plan accrual to be met from your Benefits Envelope is 21.9% of your Pensionable Earnings up to the Upper Limit.
• If your Benefits Envelope does not cover this cost then a further deduction is made from your pay.
• Any remaining Benefits Envelope can be paid into the DC Investing Plan or paid to you as extra taxable pay.
• Your pension is usually paid from age 65 – but you may have the option of retiring early or late.
• The Fund gives valuable protection for you and your family/dependants if you were to die before you retire, or if you became too ill to work.

The pension you build up in the Career average plan each year is based on a formula.

• The annual pension built up in a year is equal to: 1/60 x Pensionable Earnings between two levels (£7,077 and £63,800 at 1 April 2021)
• Your pension is based on your pensionable earnings between two levels and the pensionable service you build up in the Fund..
• Your pension is then protected against inflation.
  • Inflation is the general rise in prices, normally measured by the 'Retail Prices Index' - a figure taken from measuring how costs increase across a range of goods and services.
• You pay 5% of your pensionable earnings between the two levels into the Plan – and you do not pay income tax on the contributions you make.
• The remaining cost of the Career average plan is met by Unilever.
• Your pension is usually paid from age 65 – but you may have the option of retiring early or late.
• The Fund gives valuable protection for you and your family/dependants if you were to die before you retire, or if you became too ill to work.

You can get more information on the DB Career Average plan from the Unilever Pension Fund website.

We are not Independent Financial Advisers (IFAs) and nothing on this website should be construed as independent financial advice. If you feel you would benefit from speaking to an IFA about your personal circumstances, you can find out more information here

Katy earns £32,000 pa

So her DB Career Average plan pension built up between 1st October 2022 and 30th September 2023 is worked out as:

1/80 x £32,000 (her pensionable earnings up to the Upper Limit) = £400 a year

If Katy stays working for Unilever, this will increase up to retirement in line with the Consumer Prices Index inflation up to 5% a year. It will then be paid every year until she dies.

Next year, Katy's pensionable earnings increase to £33,000 pa (and the Upper Limit will also increase). She will then build up a pension between 1st October 2023 and 30th September 2024 worked out as:

1/80 x £33,000 (estimated pensionable earnings up to the Upper Limit) = £412.50 a year

Her pension built up between 1st October 2022 and 30th October 2023 will be increased in line with Consumer Prices inflation up to 5% a year. And if Katy stays working for Unilever, the pension earned in both years will increase up to retirement in line with Consumer Prices inflation up to 5% a year. It will then be paid every year until she dies.