Airbus Group UK Pension Scheme
SMART PENSIONS 2021/2022
SMART Pensions – More pay, same pension
SMART Pensions results in employees and the Company paying lower National Insurance Contributions
(NICs). The vast majority of employees will receive more take home pay and the Company can offset
its NIC savings against the rising employer pension contributions. What is really “smart” is that there
is no change in the level of the pension benefits an employee receives from the Airbus Group UK
Pension Scheme (“the Scheme”) as a result of participating in SMART Pensions.
You will automatically participate in SMART Pensions when you join the Scheme unless you elect to opt
out. Your salary will be reduced by the amount of the regular employee contribution. This represents a
change to your terms and conditions of employment, so you should take the opportunity to read through
the brochure. If you have any questions about SMART Pensions, or the Airbus Group UK Pension
Scheme in general, please contact the Pensions Team (see back page for contact details).
This booklet will:
1: explain how SMART Pensions work;
2: demonstrate how much NIC you will save;
3: examine what impact there may be on your state pension benefits;
4: answer your Frequently Asked Questions; and
5: advise what action you may need to take
How do SMART Pensions work?
The SMART Pensions approach to investing Payments not under
SMART Pensions…
Payments under
SMART Pensions…
in your Company pension… Company NICs Company NICs 5. The Company pays
less NICs
Smart Pensions is simply a more efficient way of paying contributions to the pension scheme. It works by Company NIC savings
eliminating the National Insurance Contributions (NICs) that you pay on your contributions to the Scheme. What the Company pays
✔
Under SMART Pensions, the overall amount of money going into the scheme does not decrease and your Pension Pension
pension scheme benefits are unaffected. Contributions Contributions
Paid by Company Paid by Company
2. The Company pays
It works like this; if you do not participate in the SMART Pensions arrangement then both you and the all the Pension
Company pay NICs on your total salary, including the part you pay into the scheme. Participation in Contributions
1. Pension Contributions Pension Contributions
SMART Pensions will reduce these NICs. The diagram shows you how. Paid by you Paid by you
1. As a member of the pension scheme, you will not make contributions into the scheme.
Your Income Tax Your Income Tax Income tax does
not change
2. Instead, the Company will pay an additional amount into the scheme. That additional amount
Your Notional/Contractual Pay
Your Contractual Pay
will be exactly the same as the amount of money that you would otherwise pay if you do not Your NICs 3. Your NIC payments
4. Your Reference Pay
Your NICs
participate in the SMART Pensions arrangement. are lower
What you get paid
including deductions
3. Your ‘Contractual Pay’ will then be reduced by an amount equal to your pre-SMART Pensions
contributions. This will result in lower NIC payments, which will increase your take home pay. Your salary is reduced
by an amount equal to
Your Take Your Take the contributions you
4. Your salary before the SMART Pensions reduction will become your ‘Reference Salary’. Your Home Pay Home Pay would otherwise have
Reference Salary will be used to determine other salary related benefits such as bonuses, paid
overtime, shift payments and pension scheme benefits. The value of these benefits will therefore Your NIC savings
be unaffected by SMART Pensions. into your take
✔
home pay
5. Because of these changes the Company pays lower NICs on employees’ salaries.
IF YOU BELIEVE YOU MAY BE ADVERSELY
What happens to the Company Savings? AFFECTED BY SMART PENSIONS WE RECOMMEND
THAT YOU TAKE INDEPENDENT FINANCIAL ADVICE
The Company wishes to maintain its commitment to provide affordable pensions for employees SMART Pensions. If you wish to Opt Out of SMART Pensions you can do so by contacting the
based on final pay, even though the overall cost of providing the benefit has significantly increased Pensions Team, but you will remain a member of the Pension Scheme.
in recent years. The Company will use the money it saves from SMART Pensions to offset against
the increased company pension contributions. Who will not benefit from SMART Pensions?
Why is this a change to my terms and conditions of employment? A few employees will not be eligible to participate in SMART Pensions including:
• Employees whose earnings fall below the Pay Protection Level, which will be £18,237 (full time
SMART Pensions does represent a change to your terms and conditions of employment. This is equivalent pay) for the tax year 2021/2022. This is because we need to ensure that:
because your contractual pay is reduced (by an equivalent amount to your pre-SMART Pension »» The hourly rate of pay does not fall below the National Minimum Wage as a result of participation
contributions). You will not pay any contributions into the pension scheme. However the Company in SMART Pensions after taking into account any other salary sacrifice arrangement in which
will provide you with a benefit by virtue of additional pension contributions into the pension scheme. the employee participates;
You would not be liable for NICs (or income tax) on this benefit. »» If the annual gross rate of pay falls below the Lower Earnings Limit an employee could lose
entitlement to State benefits.
On joining the Scheme you will automatically participate in SMART Pensions, and your salary will • Employees working for Airbus abroad where UK National Insurance is not retained
be reduced by the amount of the regular employee contribution unless you elect to Opt Out of • Employees not in the Airbus Group UK Pension Scheme.
How much will SMART Pensions increase my take home pay?
The amount of extra money you will take home will depend upon what pension contributions you pay Step 2: If your gross pay is less than the UEL (i.e. £4,189 per month) you can use the green columns
and the level of your gross pay. The ‘ready reckoner’ table will give you some indication of the difference to see how much you would save each month or year. The Company savings are also shown.
SMART Pensions will make to your take home pay.
If your gross pay is higher than the UEL you can use the blue columns to see how much you would save
The savings illustrated throughout this brochure are based on the NIC rates and the Upper Earnings each month or year. These savings may seem low this is because the rate of NIC is lower for earnings
Limit (UEL) for the tax year 2021/2022. Note that the UEL is set by the Government for each tax year. above the UEL. The company savings will help towards containing the rising Company pension contributions.
How to use the ready reckoner Step 3: Please read the notes below the table to see whether they apply to you as they may affect
the savings made.
Step 1: You will need to look up the amount of ordinary pension contributions you pay each month
to the Pension Scheme from your payslip (Ignore any Additional Voluntary Contributions you pay). Example (based on the annual UEL of £50,270. If your gross pay is less than the UEL and your ordinary
monthly pension contribution is £200, you will save £288 a year and the Company will save £331 a year.
Now refer to the ready reckoner table. (next page)
If your gross pay is more than the UEL and your ordinary monthly pension contribution is £300,
you will save £72 a year and the Company will save £497 a year.
For members of Schedules 1, 2 or 3 and the Airbus Group UK Retirement Plan
Employees who earn less than the UEL
(£50,270 for 2021/2022)
Employees who earn more than the UEL
(£50,270 for 2021/2022 )
How will SMART Pensions affect
my State Pension?
Contribution
per month (£) Employee savings (£) Company savings (£) Employee savings (£) Company savings (£)
per month per year per month per year per month per year per month per year
10 1 14 1 17 0 2 1 17
20 2 29 3 33 0 5 3 33
30 4 43 4 50 1 7 4 50
40 5 58 6 66 1 10 6 66
50 6 72 7 83 1 12 7 83
60 7 86 8 99 1 14 8 99 From 6 April 2016, the Basic State Pension has been replaced by the new State Pension.
70 8 101 10 116 1 17 10 116
80 10 115 11 132 2 19 11 132
90 11 130 12 149 2 22 12 149 The full new State Pension will be £179.60 per week.
100 12 144 14 166 2 24 14 166
110 13 158 15 182 2 26 15 182
120 14 173 17 199 2 29 17 199
Your new State Pension is based on your National Insurance record when you reach State
130 16 187 18 215 3 31 18 215 Pension age.
140 17 202 19 232 3 34 19 232
150 18 216 21 248 3 36 21 248
160 19 230 22 265 3 38 22 265
You’ll usually need to have 10 qualifying years on your National Insurance record to get any
170 20 245 23 282 3 41 23 282 new State Pension.
180 22 259 25 298 4 43 25 298
190 23 274 26 315 4 46 26 315
200 24 288 28 331 4 48 28 331 You may get less than the new full State Pension if you were contracted out before 6 April
210 25 302 29 348 4 50 29 348 2016 (only Schedule 3 members were contracted-out of the Airbus Group UK Pension Scheme).
220 26 317 30 364 4 53 30 364
230 28 331 32 381 5 55 32 381
240 29 346 33 397 5 58 33 397 You may get more than the new full State Pension if you have over a certain amount of
250 30 360 35 414 5 60 35 414 Additional State Pension.
260 31 374 36 431 5 62 36 431
270 32 389 37 447 5 65 37 447
280 34 403 39 464 6 67 39 464 You’ll need 35 qualifying years to get the new full State Pension if you don’t have a National
290 35 418 40 480 6 70 40 480 Insurance record before 6 April 2016.
300 36 432 41 497 6 72 41 497
310 37 446 43 513 6 74 43 513
320 38 461 44 530 6 77 44 530 You can find out more by visiting https://www.gov.uk/new-state-pension
330 40 475 46 546 7 79 46 546
340 41 490 47 563 7 82 47 563
350 42 504 48 580 7 84 48 580
360 43 518 50 596 7 86 50 596
370 44 533 51 613 7 89 51 613
380 46 547 52 629 8 91 52 629
390 47 562 54 646 8 94 54 646
400 48 576 55 662 8 96 55 662
410 49 590 57 679 8 98 57 679
420 50 605 58 696 8 101 58 696
430 52 619 59 712 9 103 59 712
440 53 634 61 729 9 106 61 729
450 54 648 62 745 9 108 62 745
460 55 662 63 762 9 110 63 762
470 56 677 65 778 9 113 65 778
480 58 691 66 795 10 115 66 795
490 59 706 68 811 10 118 68 811
500 60 720 69 828 10 120 69 828
Additional Voluntary Contributions (AVCs) are ignored as they do not qualify for SMART Pensions. Savings will depend on
your actual earnings and pension scheme contributions in each pay period. Savings in future tax years will depend on NICs
rates at that time. Savings are calculated using the full NIC rates for 2021/2022.
Frequently Asked Questions (FAQs)
Here are some answers to some common questions about SMART Pensions.
Does the more you earn mean the more you save? What are the Change of Lifestyle Events which would be considered for allowing a reversal
Only to a certain extent. Once earnings exceed the Upper Earnings Limit (£50,270 in tax year 2021/2022), of an opt in or opt out decision?
NIC rates reduce from 12% to 2% for members in the Airbus Group UK Pension Scheme. Employees The circumstances listed below are those which, at the time of writing, are likely to lead to the granting of
earning above this amount will therefore save proportionately less. Company consent. The Company has the right to change any of the exceptional circumstances in which
an employee may be allowed to change their decision to opt in or opt out of SMART Pensions during the
Would SMART Pensions affect my income tax position? course of the year.
No, SMART Pensions only affects NI payments. Income Tax payments would be unaffected. Currently • Pregnancy, birth or adoption of a child
you do not pay Income Tax on your pension contributions. • Marriage or divorce
• Death of dependent or death of individual on whom the employee is financially dependent
Would SMART Pensions affect any other Airbus Group benefits I receive? • Commencement of other salary sacrifice arrangement which, if employee remains in SMART Pensions,
SMART Pensions does not reduce any salary-related payments or any other benefits you receive directly would reduce contractual salary to £18,237 or below (pro-rata for part time employees)
from the Company. • Change in working hours (unless change is less than 7 hours a week)
• Place of work changing to another country
Pension scheme benefits, overtime and shift premium continue to be based on your Reference Salary. • Any other exceptional reason at discretion of Company.
Any future salary increases and all other related benefits, such as pay reviews, will be calculated on your Would SMART Pensions impact any benefits I get from the State?
Reference Salary, and are therefore unaffected by SMART Pensions. Entitlement to some State benefits, such as statutory sick pay, incapacity benefit and job seekers allowance
are based on the amount of NIC that has been paid.
The Reference Salary is used for mortgage reference letters, and therefore should not impact the amount
of any mortgage you take out, or your credit rating. Provided you continue to earn more than around £6,240 per annum on a regular basis after the introduction
of SMART Pensions, your entitlement to these benefits will not change.
Are Additional Voluntary Contributions included in SMART Pensions?
No, only your ordinary contributions can be included and any Additional Voluntary Contributions will be Although SMART Pensions could reduce the amount of statutory entitlement to maternity, paternity and
made as a payroll deduction. adoption payments, the Airbus Group will ensure that employees are no worse off by adjusting the amount
paid by the Company.
What happens to benefits where these are linked or underpinned to contributions paid?
For the purpose of benefit calculations, benefits (including the value of contribution underpins) are calculated Would SMART Pensions impact the income tax credits I get from the State?
as if you had not participated in SMART Pensions. No. SMART Pensions will not adversely affect any tax credits that you may receive. If you are unsure
about this you may wish to call the Tax Credits helpline on 0345 3003900.
How long will SMART Pensions last?
There is no end date planned. However, if the tax/National Insurance regime or the law changes, or it is no The personal savings for me are small – why should I support SMART Pensions?
longer viable for Airbus to operate this arrangement, Airbus reserve the right to withdraw SMART Pensions. The more people who join SMART Pensions, the more the Company contributes to help safeguard the
future of the pension schemes.
Should this happen employees’ pay will be adjusted back to their Reference Salary (less any other Salary
Sacrifices that they participate in) and they will begin making pension contributions again. However, they
will not have to pay any of the additional take home pay received from the reduction in NICs.
What do I need to do now?
If you wish to participate you do not need to take any further action. You will automatically be enrolled in
SMART Pensions when you join the Pension Scheme, unless you elect to opt out or, you are one of those
employees specifically excluded from participating in SMART Pensions.
What if I change my mind?
You will be able to opt in or out of SMART Pensions during the spring each year. Normally the change
will take effect from the April payroll.
In exceptional circumstances (for example, a change in working hours or earnings) you will be able to, at
the Company’s discretion, opt in or out of SMART Pensions during the course of the year.
Contact details
Additional information about SMART Pensions is available via the following:
Pensions website:
www.airbus.com/company/uk-pensions.html
email address:
ukpensions@airbus.com AIRBUS
Gunnels Wood Road
Postal address: Airbus Group UK Pensions Stevenage
Gunnels Wood Road Hertfordshire
Stevenage SG1 2AS
Hertfordshire PHONE: +44 (0)1438 313456
SG1 2AS www.airbusdefenceandspace.com
13161pc Smart Pension ©Mar 2021. All rights reserved
