Contributions

Contributions (SMART)

In the Main Section of the Plan, you choose the level of contributions you want your Account to receive. The higher the level of contributions you choose, the more the Company will contribute, up to the levels shown in the table below.

All contributions are a percentage of your Pensionable Pay
Your ‘Smart’ or ‘normal’ contribution rate The Company’s contribution Total contribution to your Account
3% 5% 8%
4% 6% 10%
5% 7%  12%

If you arrange contributions through the Smart Pension Exchange Scheme, we keep a record of your higher salary (before the reduction in ‘exchange’ for a pension contribution). We call this higher amount your ‘reference earnings’ and use it for pay reviews, calculating pension contributions, mortgage references and benefits such as life assurance.

As a member of the Main Section, your contributions can be paid through the Smart Pension Exchange Scheme or on a normal contributory basis.

If you take part in the Smart Pension Exchange Scheme, you do not pay contributions to the Plan directly. Instead, you agree to exchange part of your salary for a contribution that the Company will pay to your Account on your behalf. The Company pays these ‘Smart’ contributions alongside its normal contributions to your Account. As a result of this exchange, your salary goes down by an amount equal to your Smart contribution. (This process is sometimes called ‘salary sacrifice’.)

This ‘exchange’ reduces the National Insurance (NI) you pay. This is because you only pay NI on your salary after the exchange, which means you are paying NI on a smaller amount of earnings. This means your take-home pay will be higher than it would if you did not take part in the Smart Pension Exchange Scheme.

Important note - The Smart Pension Exchange Scheme reduces your earnings which will reduce the maximum level of contributions you can make to any other pension arrangements. It may also affect your entitlement to some State benefits which are based on your income or the National Insurance you pay.

If you are unsure how the Smart Pension Exchange Scheme might affect your State benefits, you should contact HMRC. You can find out more information about salary sacrifice arrangements like the Smart Pension Exchange Scheme at: www.gov.uk/salary-sacrifice-and-the-effects-on-paye.

How to change your contribution

You can change your rate of ‘Smart’ or ‘normal’ contributions once a year during the Flex Window.

You do this via the Flex Portal. You can also change your rate of ‘Smart’ or ‘normal’ contributions at other times if you experience a ‘life event’. Examples of such events include:

  • Birth/adoption of a child
  • Divorce/separation
  • Death of a partner
  • Marriage/civil partnership
  • Notice or start of maternity leave
Opting out of the Smart Pension Exchange Scheme

We automatically include all members of the Main Section in the Smart Pension Exchange Scheme when joining the Plan. If you want, you can choose to opt out of the Smart Pension Exchange Scheme and make contributions on a contributory basis instead. You can do this once a year during the Flex Window or at other times if you experience a ‘life event’.

Is there a limit to the contributions I can arrange through the Smart Pension Exchange Scheme each year?
You will be subject to a tax charge if the total contributions exceed the Annual Allowance, which, for most people, is £40,000 for tax years ending on or after 6 April 2016.
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