Workplace pension providers compared: can you choose yours?

Which are the best workplace pension providers? Your employer chooses the scheme, but you have some choices inside it and around it.

Asking for the best workplace pension providers hides two questions: which provider an employer should pick, and whether you can pick your own. The first is the employer’s decision, so a ranking would not help you; the second mostly has the answer "not directly", and what you can still do is covered below. If what you are really weighing is old workplace pots or a personal pension to sit beside your employer’s scheme, the form on this page sends your question to an FCA-authorised adviser, free.

Who chooses a workplace pension provider?

The employer does. The Pensions Regulator (TPR) tells employers: "You'll need to choose a pension scheme that is set up for automatic enrolment." It adds that they will need to "find a scheme yourself or get help from your accountant or a financial adviser." MoneyHelper's workplace pensions guide puts it from the member’s side: "Your employer usually sets this up for you automatically and often pays into your pension as well." Who must be enrolled, and what goes in, is in our workplace pension rules guide. You will not have to guess which scheme you are in: GOV.UK says the letter after enrolment must tell you the type of scheme and who runs it.

So a league table of the “best” providers answers the wrong person’s question. Two neighbours can have different providers because their employers chose differently, and changing jobs can mean changing scheme: your workplace pension stays yours when you move on, and you can join another workplace scheme if you get a new job.

Some employers use a personal pension as their workplace scheme. MoneyHelper calls this a group personal pension: "Your employer will set up the pension for you, but you'll have an individual contract with the provider they choose." Others use a trust-based scheme, which GOV.UK describes as a defined contribution scheme "run by a trust appointed by the employer". Either way, the employer picked it.

What employers are told to consider when they choose

The list of things an employer weighs is the nearest thing to a “how to compare” checklist, and it comes from the regulator, not from a comparison site. TPR also tells employers: "You should look at different schemes before you decide which is suitable for you and your staff." It lists what to check: "whether it will accept all your staff, how much it will cost, whether it uses the best tax relief method for your staff and whether it will work with your payroll."

Its fuller guidance adds several points that a member may never see:

• Whether the scheme can be used at all. "The pension scheme you use for automatic enrolment must meet certain rules, for example it mustn't require staff to do anything to join the scheme or to choose their own investments."
• Who runs it. "The type of scheme most likely to be available to you is one run by a large, specialist provider that is designed for many different employers to use. These generally cost less and require employers to do less, compared to other schemes."
• Cost, to the employer and to staff. "You should ask the provider what charges you and your staff will pay," and "Some schemes may have different charges for different members." The guidance also says "Some schemes may also have an exit fee for employers who change pension schemes."
• The tax relief method. "A scheme can only use one method for all your staff and this will affect your lower or higher paid staff in different ways." How tax relief reaches your pot is in our tax relief guide.

TPR keeps its own position neutral: "We cannot recommend or endorse any particular pension scheme or any organisation." It publishes a list of schemes that "have told us they are open to small employers", and says "there are many other pension schemes available that aren't listed on this website." That list is on TPR’s choose a pension scheme page and changes over time, so check it there rather than here.

Master trusts, TPR authorisation and Nest

One kind of scheme built for several employers is the master trust. TPR defines it as an occupational pension scheme that "provides money purchase benefits" and "is used, or intended to be used, by two or more employers", and that "is not a public service pension scheme"; a further limb excludes schemes "used, or intended to be used, only by employers which are connected with each other". It adds: "If you run a scheme defined as a master trust, you must be authorised by us."

TPR publishes the result. Its list of authorised master trusts opens: "We are required to publish a list of authorised master trusts. The following pension schemes have been granted master trust authorisation." The list is a record of authorisation, not a ranking, and it covers master trusts only. TPR says "new schemes must demonstrate they meet the required standards" to be authorised; that is a regulatory test, not a measure of charges or investment returns.

Nest is one of the schemes on that list, as "National Employment Savings Trust (NEST)". GOV.UK’s page for the body that runs it says the National Employment Savings Trust (NEST) Corporation is the trustee of the scheme, which "is run on a not-for-profit basis", and that the scheme ensures "that all employers have access to suitable, low-charge pension provision to meet their new duty to enrol all eligible workers into a workplace pension automatically". The corporation is, in the same page’s words, a public corporation of the Department for Work and Pensions. Its charges are on Nest pension charges, and how it compares with other workplace schemes is the question in is Nest any good.

What you can choose as an employee

Your investments inside the scheme

An automatic enrolment scheme cannot make you pick funds before you join. TPR’s guidance says it cannot "require a jobholder to make any choice to join or remain a member of a pension scheme", which is why every such scheme has a default fund for members who choose nothing. Choosing is still open to you: "the jobholder may express a choice voluntarily, if they wish, and if the scheme rules allow for it." MoneyHelper puts it from the member’s side: your provider will manage and invest your money "unless you ask to choose your own investments". Which funds a scheme offers, and how to switch, is in the scheme’s own documents, so ask your employer or the provider named in the letter you were sent. Whatever fund your money sits in can go down in value as well as up, so you could get back less than went in; the default is not a promise of growth.

The default is also where the law limits charges. The cap on a single charge structure is 0.75% a year of the pot held in the default arrangement. It comes from regulation 6(2) of SI 2015/879 for an occupational scheme such as a master trust, and from the FCA Handbook (COBS 19.6.6R) for a group personal pension. That is a limit on the default arrangement, not on every fund or every cost, and the regulations set other limits for other charge structures; pension charges and fees goes through what it covers.

Opting out

If you dislike the scheme your employer picked, leaving it is the one exit you control, and it usually means giving up what the employer would have paid in. MoneyHelper is blunt: "You can tell your employer if you’d like to opt out of your workplace pension, but it’s often like turning down extra pay." GOV.UK adds that your employer cannot encourage or force you to opt out, that leaving within a month of being added brings back what you paid in while a later exit may not, and that you will be re-enrolled every three years or sooner. Timing and refunds are covered in our guide to opting out.

A personal pension beside the workplace scheme

A personal pension is the one place where you do choose the provider, and it can sit beside the workplace scheme: for someone who already has one, GOV.UK lists "keep paying into both" among the options. What a personal pension usually lacks is the employer: MoneyHelper’s personal pensions guide gives the workplace scheme the edge since an employer usually pays in and the charges tend to be lower. That is a general view, not a calculation about your pay; how to choose a personal pension provider is on the best pensions guide.

Whether to stay in, top up or open a personal pension depends on your pay, tax position, other pensions and plans, and the answer can differ between two colleagues in the same scheme. GOV.UK says MoneyHelper gives free, impartial information about your workplace pension options, and that advice from a financial adviser is something you will usually have to pay for. An adviser introduced through the form on this page can set your own numbers against these options, including personal pensions and combining old pots, though not which scheme your employer uses.

Old pots, and when your employer changes scheme

Each job can leave its own pot with its own provider. GOV.UK says that after joining a new employer’s scheme you might be able to combine the old and new schemes, and to ask your providers; moving a pot is explained in how to transfer a pension, with the services compared in pension consolidation services. The change can also come from the employer, which may decide "they do not want to use a scheme anymore", but GOV.UK says "If you’ve been automatically enrolled, your employer cannot close a pension scheme without automatically enrolling you into another one." If you think your employer is mishandling automatic enrolment, GOV.UK says to "Contact The Pensions Regulator". Where workplace schemes sit among the other kinds of pension is in how the UK pension system works.

Workplace pension providers: questions people ask

Which providers can a small business choose from for automatic enrolment?

TPR keeps a list of schemes that have told it they take small employers, and is clear that the list is not complete or an endorsement. For master trusts, its separate list shows which are authorised. Both are linked in the sections above and change over time, so read them at TPR rather than in a copy.

Which employer offers the best pension?

The legal minimum is a floor, and the gap above it is where employers differ. GOV.UK says some schemes give your employer the option to pay in more than the legal minimum, so ask what your employer pays in, not only whose name is on the scheme; our workplace pension rules guide sets out the floor.

What is the best pension provider for salary sacrifice?

Salary sacrifice is a pay arrangement, not a kind of provider: you agree to a lower salary and your employer pays the difference into your pension. GOV.UK’s advice is simply to ask your employer whether it uses salary sacrifice, since it needs the employer’s agreement. See salary sacrifice pensions.

What pension can a limited company director or self-employed person use?

GOV.UK names Nest as a workplace scheme that "working self-employed people or sole directors of limited companies can use", and adds "You could set up a personal or stakeholder pension." The choices are compared in the self-employed pensions guide.

Your next step

Your employer decides who provides your workplace pension, so the useful questions are what is in your scheme and what to do around it. Start with the letter your employer sent and the scheme’s own documents, and for a defined contribution pot, GOV.UK points to Pension Wise, which MoneyHelper offers free to anyone aged 50 or over. To have your pensions looked at as a set, anything you put into the form on this page is forwarded to an FCA-authorised adviser, with no fee for the enquiry.