During these difficult times, companies are trying to curb their pension contributions. However, all of that can be avoided with Smart Pension. If your workplace has not started using this service, it’s time to consider doing so. It enables your employees to maintain their pension contributions or even increase them at no cost to your company.
Andrew Evans and William Wynne founded Smart Pension in 2014 to specialise in providing business pension solutions. The company runs a master trust pension system that ensures that employers enrol employees easily. It focuses on modernising retirement savings, improving efficiency, and ensuring transparent management of pension benefits.
What is a Smart Pension?
Smart Pension is one of the leading pensions and retirement technology companies that is based in the UK. It is a relatively new pension scheme currently used in the UK. It enables companies to automatically enter their workers into a workplace pension. If you receive a notice from your employer that a percentage of your paycheck will be paid to them. Therefore, it means that your employer has automatically enrolled you on the pension scheme. This is done to make sure some of your paycheck will go to your pension.
Back in 2017/18, we saw the introduction of a law that restricted benefits obtained through salary sacrifice. During that time, the government recognised the importance of a smart pension. Due to this, they exclude the scheme and acknowledge the importance of enabling workers to save for their retirement. By saving using this way, it delivers a National Insurance Contribution (NIC) reduction. As such the pension contributions are already tax efficient by themselves.
Inner working of the technology
Knowing how Smart Pension works is tricky as this is a full digital pension scheme, as such there are caveats in this area. To explain it briefly, it works by leveraging a fully digital platform that automates the process of retirement saving. This benefits the worker and the company.
A Smart Pension is technically called a master trust. In this guide, we will explain what this is and why it matters, how all of this works and If you should consider joining.
The master trust
Multiple companies or independent trustees use a master trust, a type of defined contribution pension. This trust will then look after the pension savings on behalf of the members. So you could find you have the same pension plans or even company as your friends even though you work in a different field.
Major decisions are taken by the master trust or even the Smart Pension scheme themselves. Your company can still make decisions about contributions, investments, and benefits. Many companies have chosen to use a master trust pension scheme to just automatically enter their staff into a pension. This is better for them than running their pension scheme.
Contributions & fees
Contributions are highly varied depending on what your company offers you in your pensions package. However, you can make your contribution to your pension, including your employer and the government. This can be as large as 15% or as low as 3% it all depends on you and how much you want to contribute.
There is a minimum amount you and the company must contribute that is already set by the government. The staff contribution minimum is 3% while the company minimum is 5%, so the total contribution is 8% of your salary. Like all other workplace pension schemes, you will receive tax relief on pension contributions from the government. Moreover, the minimum employee contribution is effectively 4%.
Regarding the fees, it depends on the contract of the company with Smart Pension. However, the company charges employees a 0.30% annual management fee and a £1.75 monthly fee, which it waives if the account holds £100 or less and automatically deducts these fees from their salary or contributions.
Withdraw or transfer pension
Withdrawing and even transferring your pension in or out from your fund is possible. However, you must note that it will take quite a bit of time. Regarding withdrawing your funds to do so, you need to download a ‘Transfer Out’ form from the company website and send it to the new scheme. It will then contact Smart Pension. After a transfer has been initiated, the process can take several months - typically an average of 12 weeks.
With transfer it is quite easy and quick, you can transfer your old pension pots or others into the scheme for free. To do so smart pension needs a letter of authority from you and a current benefit statement from your old pension provider. From this will need to be checked and see if it is suitable and contact the old provider for any further information. However, it must be noted that some plans are not acceptable due to either incompatible types or potential loss of benefits upon transfer.
Automatic enrolment
Since 2008, it has been a legal requirement for employers to set up a pension scheme for their staff. The company must first automatically enrol all eligible employees into the scheme. However, the company itself determines enrolment eligibility. Your employer will automatically enrol you in their workplace scheme if you meet these criteria when you start a new job. Automatic enrolment applies to employees who:
- Are not already in the employer’s workplace pension
- Aged between 22 and the State Pension age
- Earning more than £10,000 a year
- Usually work in the UK
Smart pension company background
To give a background on the company smart pension one of the leading pension scheme companies that is based in the UK. Andrew Evans and Will Wynne founded the company in 2014 as one of the UK’s pioneering fintech firms.
The company has been at the forefront in the revolutionising of workplace pensions. The company streamlines operations by offering a digital platform that automates enrolment and contribution processing, requiring little to no administrative effort. This technology-driven approach has helped retirement savings for millions, ensuring cost and transparency for both employees and businesses.
Ever since its launch, the company had rapid growth with the increase of digitalization in the world of finance. It has been the go-to company for many workplaces as the lack of admin work is enticing for companies. Financial leaders such as Legal & General, JP Morgan, and Chrysalis Investments now support Smart Pension.
Our takes
Smart Pension is a great way to get your or your company's pension scheme sorted. With its auto-enrolment and low admin work, this makes it easy for workplaces to ensure their pension plans are done correctly. We have laid out all the necessary details for you to understand the inner workings. With this, you can understand a little more about this scheme and how to best use it.
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