Choosing a workplace pension is one of the first big benefits decisions a growing business makes, and it is easy to default to whatever your accountant or payroll software suggests. It is worth a few minutes more thought, because the provider you pick affects your admin, your costs and the retirement outcomes of everyone you employ.
The short answer: NEST is the simplest free, government-backed option for most small employers. Smart Pension, Penfold, The People's Pension and Aviva add features such as apps, wider fund choice and hands-on support, usually for a setup or per-member fee. The right choice comes down to cost, ease of setup, fund options and the level of support you want.
PerkIQ does not sell or administer pensions. This is an independent guide, with no referral fees and no sponsored placements. We take no commission from providers, and where we can, we use our provider relationships to get discounts for our users instead.
Do small businesses have to offer a workplace pension?
Yes. Under auto-enrolment, every UK employer must put eligible staff into a qualifying workplace pension and pay into it. Eligible employees are generally those aged 22 or over, under State Pension age, and earning more than £10,000 a year. Even if you employ just one person who meets the criteria, the duties apply.
The rules are set and enforced by The Pensions Regulator, and the penalties for ignoring them are real. If you are still working out your obligations, start with our pension auto-enrolment guide and come back to provider selection once you know your duties.
What is the best workplace pension for a small business?
There is no single best provider. The right one depends on how much you want to spend, how quickly you need to set it up, how much fund choice your team wants, and how much support you need. For most UK small businesses the realistic shortlist is NEST, Smart Pension, Penfold, The People's Pension and Aviva.
All five are qualifying schemes that meet auto-enrolment standards, so the decision is about fit, not compliance. The sections below set out what each is best for, then the criteria to judge them on.
How much does a workplace pension cost an employer?
Two costs matter. The first is your contributions. Auto-enrolment sets a minimum total contribution of 8% of an employee's qualifying earnings (the slice of pay between £6,240 and £50,270 in 2026/27), of which the employer must pay at least 3%; the employee makes up the rest. The second is the provider's charges. Many providers are free for the employer to use and instead levy an annual management charge on the employee's pot, which for a default fund is capped at 0.75%a year. Some providers add a one-off setup fee or a monthly administration charge.
In practice your headline cost is the contributions, and the provider choice mainly affects admin time and the fees your employees pay on their savings. Cheaper for employees is not always better if it comes with poor support or a clunky setup.
NEST, Smart Pension, Penfold, The People's Pension and Aviva compared
NEST is the government-backed scheme set up specifically for auto-enrolment. It is free for employers, has a legal duty to accept any employer that wants to use it, and is a low-risk, no-frills choice. Best for employers who want the simplest possible route at no cost.
Smart Pension is a technology-led master trust with a member app, a broad fund range and a reputation for service, and it is straightforward to run through payroll. Best for employers who want a modern experience and good support. There is no setup fee, though Smart Pension may apply a small monthly employer charge to smaller schemes that join directly.
Penfold is an app-first provider known for quick onboarding and a clean member experience, and it is free for employers. Best for smaller, digital-first teams that value ease of use.
The People's Pension is a large not-for-profit master trust used by a significant share of UK workers, with payroll integration and setup support. Best for employers who want an established, widely used scheme. Employers pay a one-off setup fee of £500 plus VAT, or nothing if they join through an adviser or payroll firm.
Aviva offers a Group Personal Pension that is simple to set up and manage, backed by a major insurer and adviser network. There is no setup fee, but a monthly administration charge of roughly £30 to £50 applies. Best for employers who value a well-known brand and access to advice.
If you are weighing two of these against each other, we have side-by-side comparisons of NEST and Smart Pension, NEST and The People's Pension, and Smart Pension and Penfold.
| Provider | Best for | Employer cost |
|---|---|---|
| NEST | Simplicity, zero cost | Free |
| Smart Pension | Modern app and service | No setup fee; small monthly charge may apply |
| Penfold | Digital-first teams | Free |
| The People's Pension | Established master trust | £500 + VAT setup (free via adviser) |
| Aviva | Brand and adviser support | No setup fee; ~£30 to £50/month admin |
The fees above are examples, correct as at June 2026, and they change. Some providers negotiate charges for larger schemes or waive a setup fee when you join through an adviser or payroll firm, so confirm the current charges directly with the provider before you decide.
How to choose: what to weigh
- Total cost to you (contributions) and to employees (annual charges).
- Fund choice, including responsible or Sharia options if your team wants them.
- Payroll and HRIS integration, so contributions file automatically each pay run.
- Member experience, particularly a usable app and clear statements.
- Setup and support, especially if you have no dedicated HR or finance team.
- Transfers in, if employees want to consolidate older pots.
How to set up a workplace pension
The process is the same whichever provider you choose:
- Confirm your duties start date with The Pensions Regulator.
- Choose a provider and open the scheme.
- Set your contribution levels at or above the legal minimum.
- Assess your staff and enrol everyone who is eligible.
- Write to your employees explaining what has happened and their right to opt out.
- Connect the scheme to your payroll so contributions file each pay run.
- Complete your declaration of compliance, then re-enrol eligible staff every three years.
Where PerkIQ fits
Your pension is one of seven categories PerkIQ scores when it audits an employer's benefits. If you want to see how your pension provision, and the rest of your package, compares with best practice, you can run a free benefits healthcheck in about five minutes, or browse pension providers in our directory.
