We’re updating our charging structure

We are pleased to say we're making the following changes to your employees' charging structure from 1 December 2020.

This page is for employers who have chosen us as their pension provider.

Updated 8 October 2020

What’s changing?

Current member charging structure

0.75% annual management charge

New member charging structure

0.30% annual management charge* + £1.25 monthly member fee**

Our new charging structure is estimated to be equivalent to a 0.46% annual management charge (AMC) as set out in the table below.

*This charge will apply to all but four of our investment funds, but those four funds will also benefit from a reduction in charges. Find out more by reading our investment guide.
** This monthly fee will not apply to members who no longer contribute to their Smart Pension account and have £100 or less in their account.

Why are we making these changes?

We believe a dual charge is fairer for your employees as it better reflects the cost of providing pensions and reduces the charges they will pay throughout their pension saving journey.***

It's good news: the annual management charge is going down, and we are introducing a separate monthly member fee. This will help us to carry on investing in and improving our pension proposition for you and your employees.

***Assumes an average pension pot of at least £3,333.

How does our new charging structure compare with a single annual management charge?

The table below estimates that our new charging structure is equivalent to an AMC of 0.46%. We've highlighted this in green below.

This table has been taken from page 65 of the Department for Work and Pensions consultation 'Better workplace pensions: Further measures for savers', available here. The charge cap methodology used shows that the estimated single AMC for our new charging structure is 0.46%.


What should I tell my employees?

We’ll be communicating with all of your affected employees from the middle of October to let them know about these changes.

However, it may be a good idea to discuss these changes with them. You can let them know that the more money they have in their Smart Pension account, the more likely our new charging structure will reduce the amount they pay.

We’ll also be telling them about our new free pension consolidation service. This makes it easier for members to add other pension pots from previous jobs to their Smart Pension dashboard and transfer them  over to us if they want to. That way, they can have all of their pension savings in one place and get a clearer idea of whether or not they're on track to meet their retirement goals.

It is quick and easy to do. You can let your employees know that they can access this feature by signing in to their Smart Pension account at www.smartpension.co.uk/sign-in and selecting Get started on the section labelled Bring your pensions together.

What do these charges pay for?

We've created this animation to help your employees better understand what their charges pay for. We will include this video in the communication we send to them from the middle of October. However, feel free to share this with them to build awareness in the meantime.

How do we compare to other pension providers?

We are one of the most competitively-priced pension providers. Our new structure will reduce the amount members have to pay over time and, if they actively contribute to the pension scheme or have transferred other pension savings over to us, will lead to a better outcome at retirement.***

The below table shows how our new charging structure compares with other pension providers.


***Assumes an average pension pot of at least £3,333.

We've used the following sources to create this table and the information is correct as at 8 October 2020.
NOW: Pensions - employer and member charges
Nest - employer and member charges
The People's Pension - employer charges and member charges
Creative Pension Trust - employer and member charges

What does this mean for members?

Daniel, 35, has been actively saving for several years

Daniel has been saving into a pension for several years. He’s earning £35,000 per year, and actively contributing to his Smart Pension account. His pension savings with Smart Pension are currently worth £2,000 – he contributes 5% of his salary to his Smart Pension account and his employer contributes 3%.

This is how the new charges will affect Daniel:

This assumes a member aged 35 years old with a starting fund of £2,000, a salary of £35,000 per year, paying 8% total contribution, based on qualifying earnings for 20/21 financial year, real investment returns (5% less inflation of 2%) and a retirement age of 65.

Under the current charging structure, Daniel’s pension savings would be worth £78,828 when he reaches his selected retirement age. Under the new charging structure, his pension savings would be worth £84,754 when he reaches his selected retirement age.

As a result of our new charging structure, Daniel's pension savings would be worth £5,926 more when he comes to retire.

We’ll ask Daniel if he might want to save more into his pension, and to consider transferring other pension savings to us using our new pension consolidation service. The more savings he has in his Smart Pension account, the more likely our new charges will reduce the fees he pays – but we’ll also remind him to check whether our charges are lower than those offered by any other pension providers he’s using.

Martin, 40, has been saving for several years but no longer actively contributes to his pension

Martin’s pension savings with Smart Pension are worth £5,000, but he hasn't been contributing to his Smart Pension account for a while.

This is how the new charges will affect Martin:

This assumes a member aged 40 years old with a fund of £5,000, who no longer contributes, real investment returns (5% less inflation of 2%) and a retirement age of 65.

Under the current charging structure, Martin’s pension savings would be worth £8,891 when he reaches his selected retirement age. Under the new charging structure, his pension savings would be worth £9,429 when he reaches his selected retirement age.

In short, this means Martin's pension savings would be worth £538 more at retirement as a result of our new charging structure.

We'll ask Martin if he might wish to consider transferring his pension savings to us. This is because the more savings he has in his Smart Pension account, the more likely our new charges will reduce the fees he pays. We will remind him to check whether our charges are lower than those offered by his other pension providers. We'll also let Martin know he can use our pension consolidation service to bring his pension savings together.

Rosie, 25, a young saver who actively contributes to her pension 

Rosie is a young saver with an annual salary of £21,000. She actively contributes to her Smart Pension account and her pension savings are currently worth £500. She contributes 5% of her salary to her Smart Pension account and her employer contributes 3%.

This is how the new charges will affect Rosie: 

This assumes a member aged 25 years old with a starting fund of £500, a salary of £21,000 per year, paying 8% total contribution, based on qualifying earnings for 20/21 financial year, real investment returns (5% less inflation of 2%) and a retirement age of 65.

Under the current charging structure, Rosie’s pension savings would be worth £113,451 when she reaches her selected retirement age. Under the new charging structure, her pension savings would be worth £125,194 at the same point in time. As a result of our new charging structure, her pension savings would be worth £11,743 more when she retires.

We’ll be asking Rosie to consider whether she can afford to save more into her pension savings. Doing so will enable her to take better advantage of our new charging structure.

Ali, 24, a young saver who no longer contributes to his pension

Ali was saving for a couple of years but has now stopped. His pension savings with Smart Pension are worth £2,000.

This is how the changes will affect Ali:

This assumes a member aged 24 years old with a fund of £2,000, who no longer contributes, real investment returns (5% less inflation of 2%) and a retirement age of 65.

‍Under the current charging structure, Ali’s pension savings would be worth £5,417 when he reaches his selected retirement age. Under the new charging structure, his pension savings would be worth £5,334 at the same point in time.

As a result of our new charging structure, his pension savings would be worth £83 less when he comes to retire. He might consider transferring pension savings from us to other providers, or from other pension providers to us – because the more savings he has in his Smart Pension account, the more likely our new charges will reduce the fees he pays.

You can rest assured that we'll be proactive in reminding Ali to check whether our charges are lower than those offered by any other providers he may be using.

Nadiya, 50, has been saving for several years but no longer actively contributes to her pension

Nadiya’s pension savings are worth £20,000, but she hasn’t been contributing to her Smart Pension account for a while.

This is how the new charges with affect Nadiya:

This assumes a member aged 50 years old with a fund of £20,000, who no longer contributes, real investment returns (5% less inflation of 2%) and a retirement age of 65.

Under the current charging structure, Nadiya’s pension savings would be worth £28,502 when she reaches her selected retirement age. Under the new charging structure, her pension savings would be worth £30,314 when she reaches her selected retirement age.

In short, Nadiya's pension savings would be worth £1,812 more at retirement as a result of our new charging structure.

We’ll ask Nadiya to consider transferring other pension savings to us. This is because the more savings she has in her Smart Pension account, the more likely our new charges will reduce the fees she pays. We will remind her to check whether our charges are lower than those offered by her other pension providers. We’ll also let Nadiya know that she can use our pension consolidation service to bring her pension savings together.

Fatima, 55, has been saving for several years and actively contributes to her pension

Fatima has been saving into a pension for several years. Her annual salary is £60,000. She actively contributes to her Smart Pension account and the current value of her pension savings is £10,000. She contributes 5% to her pension and her employer contributes 3%.

This is how the new charges will affect Fatima:

This assumes a member aged 55 years old with a starting fund of £10,000, a salary of £60,000 per year, paying 8% total contribution, based on qualifying earnings for 20/21 financial year, real investment returns (5% less inflation of 2%) and a retirement age of 65.

‍Under the current charging structure, Fatima’s pension savings would be worth £33,683 when she reaches her selected retirement age. Under the new charging structure, her pension savings would be worth £34,678 when she reaches her selected retirement age.

In short, Fatima's pension savings would be worth £995 more at retirement as a result of our new charging structure.

We’ll ask Fatima to consider transferring other pension savings to us. This is because the more savings she has in her Smart Pension account, the more likely our new charges will reduce the fees she pays. We will remind her to check whether our charges are lower than those offered by her other pension providers. We’ll also let Fatima know she can use our pension consolidation to bring her pension savings together.

Find out more

We’re here to help you help your employees. If you’ve got any questions about these changes and how they affect your employees, please get in touch with us by phone on 0330 1247408 or email us at ask@smartpension.co.uk.

Frequently asked questions

Why are we making these changes?

We care about your employees’ long-term future and the sustainability of the Smart Pension Master Trust. These changes will positively affect your employees who save with us throughout their pension journey.

We believe a dual charge is fairer to your employees as it better reflects the cost of providing pensions and reduces the charges they will pay throughout their pension saving journey.***

*** Assumes an average pension pot of at least £3,333.

How will this affect my employees who actively save into their pension?

Under our new charging structure, all members who pay 0.75% AMC will now pay a lower annual management charge each year. They will pay a 0.30% annual management charge as well as a monthly fee of £1.25.

How will this affect my employees who no longer contribute to their account?

Under our new charging structure, members with more than £100 in pension savings who no longer contribute to their Smart Pension account will pay a 0.30% annual management charge and a monthly fee of £1.25.

Please note the monthly fee will not apply if the member has £100 or less in their Smart Pension account.

What is the pension consolidation service?

Our pension consolidation service makes it easier for members to see all of their pension savings in one place. That way, they can get a clearer idea of whether or not they’re on track to meet their retirement goals.

We’ve partnered with Pension Lab, so that members can see all their pension savings from different providers. This service, which will be free to use, has been rigorously tested and we’re delighted to be rolling it out to all scheme members.

It also means they'll be in a position to transfer other pots over to their Smart Pension account with just a few clicks – we’ll do all the hard work for them.

Members will be able to access this service easily by signing in to their Smart Pension account.

Why should my employees use the pension consolidation service?

It can be difficult for members to understand the full picture of their pension savings if they have pension schemes with multiple providers or employers.

This service builds them a personalised dashboard that allows them to see all of their pension schemes in one place. This gives them a much better idea of how much they’ve saved and how these savings are performing.

Some people might prefer to have all their pension savings with one provider – if a member would like to consolidate their pension savings, lots of information is available to support them in making that decision. And, if they decide to transfer to Smart Pension, they can do this from their dashboard.

Can employees who no longer contribute to their Smart Pension account use the pension consolidation service?

Yes, members who no longer contribute to their Smart Pension account have access to the consolidation service, so they can also transfer other pension savings into the Smart Pension Master Trust.

Do charges still apply if an employee passes away?

Once we have been notified of the death of a member, we will no longer charge their Smart Pension account. This means they will not be charged the 0.30% AMC or the £1.25 monthly fee.

Do my employees pay any other charges?

No. We charge the £1.25 monthly fee and the 0.30% annual management charge*.

*This charge will apply to all but four of our investment funds. Those four funds will also benefit from a reduction in charges. Find out more by reading our investment guide.

What do these charges pay for?

Members sometimes aren’t aware that pension schemes make a regular charge. Our charges cover the cost of administering the Smart Pension account, expert oversight, decision-making about investments, and all the customer support you’d expect – including scheme information, our mobile app and regular administration such as annual pension statements.

How do employees pay these charges?

We take the cost of the charges automatically from your employees’ pension savings.

Do I need to tell my employees about this change?

We’ll be sending out clear communications to all affected members, explaining what’s happening with our charges.

The changes apply to all existing members who pay 0.75% AMC.

Do I need to speak to my adviser about these changes?

We have already communicated with your adviser, letting them know what’s changing and why we are introducing our new charging structure. If you would like to discuss these changes or have any questions about the new charging structure, we’d recommend you get in touch with your adviser.

Has coronavirus triggered any part of these changes?

No. We remain in a strong position. These updates to our charging structure are a normal part of our plan, and the change to dual charging is a proactive step.