- Joining the pension
Get the most from your pension
- Use the tools
- Boost your pension
- Approaching retirement
- Contribution options
- Investment choices
- Documents and FAQ
How contributions are made
The way that contributions are made into your pension is through 'SMART Pay' also known as Salary Sacrifice or Salary Exchange.
If your earnings are below the personal allowance for income tax you won’t benefit from tax relief on your personal contributions as you don’t pay income tax. However, this doesn’t affect the amount that is paid into your pension and you’ll continue to benefit from the money that your employer pays in.
What are the benefits?
- The same amount is paid into your pension as if you weren't paying by SMART Pay.
- You'll save on National Insurance (NI) contributions.
How does it work?
SMART Pay works like this:
- You agree to exchange an amount of your gross salary equal to the gross pension contributions you would normally make
- Centrica adds its contribution
- They put the total amount in your pension
- Your salary exchange payment is treated and referred to as an employer payment
What does this mean for you?
Let's assume your salary is £25,000. You pay 5% of your basic pensionable salary as a pension contribution. But instead of paying £1,250 into your pension as a member contribution, you exchange £1,250 of your gross salary. Because you pay less NI on your reduced salary, your take home pay is higher.
Remember these figures are an example. How SMART Pay works for you will depend on your circumstances and any future changes in NI rules. Tax rules and limits may change in the future. The information here is based on our pension experts' understanding of the current situation.
Are there any disadvantages?
SMART Pay isn't right for some people. There may be some impact on state earnings related benefits, other company benefits or your ability to borrow.
If you wish to opt out of SMART Pay, contact Centrica People Services. Please be aware that if you opt out you will not benefit from reduced National Insurance contributions.
When you opt out of SMART Pay, you will make your contributions by deduction from your salary. See below for more information on how it works.
Laws and tax rules may change in the future. The information here is based on our understanding in April 2020. Your own circumstances also have an impact on tax treatment.
Tax rules and limits may change in the future. The information here is based on our understanding in April 2020. Your own circumstances - including where you live in the UK - also have an impact on tax treatment. Find out more about how tax rates can differ on gov.uk.