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Smart Pension - how it works

Smart Pension is a type of pension scheme offered by employers to get you enrolled into saving for retirement. Here's what you need to know.

In this article
What is Smart Pension? How do master trusts work? How much can you pay in via Smart Pension?
What are Smart Pension's fees? Can I transfer my pension with Smart Pension? Where can I invest my pension with Smart Pension?

What is Smart Pension?

Smart Pension is a pension scheme that enables employers in the UK to automatically enrol employees in a workplace pension.

So, if you're company tells you that a percentage of your salary is going to be paid in Smart Pension each month, this is why.

Smart Pension is technically called a 'master trust'. In this guide, we'll explain what this is and why it matters, how Smart Pension works and whether you can transfer old pensions into the scheme. 

 

How do master trusts work?

A master trust is a type of defined contribution pension that can be used by multiple employers – with independent trustees who look after pension savings on behalf of all the employees who are members.

So you might find that you have the same pension as your neighbour, even though you work for different companies. 

Although the major decisions are taken by the master trust, your employer can still make decisions about contributions, investments, and benefits.

Many employers have chosen to use a master trust pension scheme to automatically enrol their staff into a pension, rather than set up and run their own workplace pension scheme. 

How much can you pay in via Smart Pension?

This all depends on what your employer offers you as part of your pensions package, but you will make contributions, along with your employer and the government.

The minimum amount you must contribute is set by the government and show in the table below. We've explained this in more detail in our guide to pension auto-enrolment.

Other people, such as family and friends, can also pay into Smart Pension for you. 

Like all other workplace pension schemes, you’ll receive tax relief on pension contributions from the government.

Period Employer minimum contribution Staff contribution Total minimum contribution
6 April 2018-5 April 2019 2% 3% 5%
6 April 2019 onward 3% 5% 8%

What are Smart Pension's fees?

The company charges employees an ‘assets under administration’ fee of 0.75% a year.

So, if you pay £100 into your Smart Pension, £99.25 will be paid in, and 75p will be taken in charges. 

Can I transfer my pension with Smart Pension?

Transferring out

You can transfer your pension money away from a Smart Pension fund.

You need to download a 'Transfer Out' form from Smart Pension's 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.

Transferring in

You can transfer other pension pots into The Smart Pension for free. 

To transfer in, Smart Pension needs a letter of authority from you and a current benefit statement from your old pension provider. 

These need to be sent to Smart Pensions, who will check that the plan is suitable and contact the old provider for any further information.

There are some pension plans or schemes which are not acceptable due to being an incompatible type or potential loss of benefits upon transfer. These will likely be any defined benefit and final salary pensions you might have. 

Where can I invest my pension with Smart Pension?

Smart Pension currently offers sixteen different funds that savers can choose from. 

  • Smart Growth Fund - Higher risk
  • Smart Growth Fund - Moderate risk
  • Smart Growth Fund - Lower risk
  • Smart De-risking Fund
  • Smart Lower Risk Fund
  • Smart UK FTSE 100 Equity Index Fund
  • Smart World (ex UK) Developed Equity Index Fund
  • Smart North America Equity Index Fund
  • Smart World Emerging Markets Equity Index Fund
  • Smart All Stocks Index - Linked Gilts Index Fund
  • Smart Overseas Bond Index Fund - GBP Hedged
  • Smart Cash Fund
  • Smart Income Fund
  • Smart Annuity Fund
  • Smart Sharia Fund
  • Smart Ethical Global Equity Index Fund

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