How payments are made

The way that payments are made into your pension is either through SMART Pensions (also known as salary sacrifice) or after-tax earnings.

If you're not sure how payments are made into the BTRSS, ask BT.

What are the benefits

  • You pay the same amount into your pension as you would if you weren't paying by SMART Pensions
  • You'll save on National Insurance (NI) contributions and reduce the amount of your earnings that are subject to income tax
  • You can either increase your take home pay, or you can keep your take home pay the same but put a bigger contribution into your pension

How does it work?

SMART Pensions works like this:

  1. You agree to exchange some of your gross salary so it can be invested in your pension
  2. BT adds their contribution
  3. They put the total amount in your pension

You can choose not to use Smart Pensions to make your pension payments on BT's Your Rewards site.

What does it mean for you?

Have a look at these examples to see how SMART Pensions could work for you. For further information, please see BT's SMART pension Q&A (Standard Life are not responsible for the content of this document).

Example 1: Basic rate tax payer - earning £25,000 a year.

Employee earning £25,000 a year who pays 5% to the BTRSS and gets a further BT payment of 10%.

Without SMART Pensions With SMART Pensions
Salary £25,000 £25,000
Personal Allowance 2021/2022 £12,570 £12,570
SMART contribution N/A £1,250
Taxable income £12,430 £11,180
Tax at 20% £2,486 £2,236
Pay after tax £22,514 £21,514
NI Earnings 12% Band £184-£967 p/w** £41,368 £41,368
NI Earnings £15,432 £14,182
NI at 12% £1,851.80 £1,701.80
Net pay £20,662 £19,812
Pension contribution £1,000* N/A
Take home pay £19,662 £19,812
Grossed up tax relief on pension contribution £250 N/A
Total pension contribution £1,250 £1,250
Net effect after all tax relief £19,662 £19,812

*£1,000 would be deducted from net pay and paid to Standard Life who would add back £250 basic rate tax, making a total of £1,250 invested.

** National Insurance contributions (NI) are currently payable at the rate of 12% on earnings between £184 and £967 per week and at the rate of 2% on earnings above this amount.

Employee earning £60,000 a year who pays 5% to the BTRSS and gets a further BT payment of 10%.

Without SMART Pensions With SMART Pensions
Salary £60,000 £60,000
Personal Allowance 2021/2022 £12,570 £12,570
SMART contribution N/A £2,500
Total taxable income £47,430 £44,930
Tax at 20% £7,540 £7,540
Higher rate taxable income £3,650 £1,150
Higher rate tax at 40% £3,892 £2,892
Pay after tax £48,568 £47,068
NI Earnings 12% Band £184-£892 p/w** £37,926 £37,926
NI Earnings £50,432 £47,932
NI at 12% £4,851.80 £4,851.80
NI at 2% £200 £150
Net pay £35,015.88 £35,565.88
Pension contribution £2,000* N/A
Take home pay £41,516.20 £42,066.20
Grossed up tax relief on pension contribution £500 N/A
Total pension contribution £2,000 £2,500
Higher rate tax relief to be reclaimed from HMRC £500 £0
Net effect after all tax relief £41,516.20 £41,516.20

£2,000 would be deducted from net pay and paid to Standard Life who would add back £500 basic rate tax, making a total of £2,500 invested. Further tax relief of £500 would need to be claimed directly from HMRC.

** National Insurance contributions (NI) are currently payable at the rate of 12% on earnings between £184 and £967 per week and at the rate of 2% on earnings above this amount.


Remember these figures are an example. How SMART Pensions 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 Pensions might not be right for you if you do not currently pay tax. It's a change to your terms of employment and could affect your state benefits, other company benefits or your ability to borrow.

If you're not sure whether SMART Pensions is right for you, seek financial advice.