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Employment contracts and pay

Choose a workplace pension scheme

How to select a qualifying pension scheme for auto-enrolment. Compares master trusts (NEST, People's Pension), group personal pensions, and occupational schemes by charges, features, and suitability for different employer sizes.

UK-wide
Guide summary

How to select a qualifying pension scheme for auto-enrolment. Compares master trusts (NEST, People's Pension), group personal pensions, and occupational schemes by charges, features, and suitability for different employer sizes. What makes a scheme 'qualifying'? Your pension scheme must meet minimum quality requirements set out in legislation.

  • Master trust: Multi-employer occupational scheme (e.g. NEST, People's Pension, NOW Pensions). Must be authorised by TPR. Handles admin for employers.
  • Group personal pension (GPP): Contract-based scheme run by an insurance provider. Each worker has an individual contract with the provider. Employer selects the provider.
  • Stakeholder pension: A type of personal pension with government-set charge cap (1.5% reducing to 1% after 10 years). Low minimum contributions. Must accept transfers.
  • Occupational pension: Employer's own scheme (defined benefit or defined contribution). Requires trustees and TPR registration. Typically larger employers.
  • NEST (National Employment Savings Trust): Government-backed master trust. Must accept all employers. Charges 1.8% on contributions plus 0.3% annual management charge. No transfer restrictions.
  • Minimum total contribution: 8% of qualifying earnings
  • Minimum employer contribution: 3% of qualifying earnings
  • Employee contribution (including tax relief): 5% of qualifying earnings
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What makes a scheme 'qualifying'?

Your pension scheme must meet minimum quality requirements set out in legislation. For defined contribution schemes (the most common type), this means total contributions of at least 8% of qualifying earnings, with at least 3% from the employer.

Most established pension providers offer schemes that automatically meet these requirements. You do not need to check the technical details yourself — your provider will confirm the scheme is qualifying.

Master trusts: simplest option for most employers

Master trusts are multi-employer occupational pension schemes. They handle most of the administration for you, including investment management, member communications, and regulatory compliance. They are the most popular choice for small and medium-sized employers.

Key features:

  • Quick to set up (usually online, within a few days)
  • Low ongoing administration for employers
  • Authorised and supervised by The Pensions Regulator
  • Default investment strategy managed by professionals

The main master trusts are:

  • NEST — Government-backed, must accept all employers. Charges 1.8% on contributions plus 0.3% annual management charge.
  • People's Pension — Run by B&CE. Popular with construction sector. Charges vary by scheme size.
  • NOW: Pensions — Danish-backed. Charges contribution fee plus annual management charge.
  • Smart Pension, The Lewis Trust — Other authorised master trusts with varying features.

Group personal pensions

A group personal pension (GPP) is a contract-based scheme run by an insurance company. Each worker has an individual contract with the provider. GPPs offer more flexibility in investment choices than most master trusts.

GPPs are typically offered by providers such as Aviva, Scottish Widows, Royal London, and Legal & General. They are popular with medium-sized employers who want more control over scheme features.

How to choose

Consider these factors when selecting a scheme:

  • Charges: Compare contribution charges, annual management charges, and any setup fees. Lower charges mean more of each contribution goes into the worker's pension pot.
  • Payroll integration: Check the scheme works with your payroll software. Most major providers integrate with common payroll systems.
  • Online tools: Look for online employer portals that make it easy to manage enrolments, contributions, and opt-outs.
  • Support: Consider the level of employer support available, especially if you are setting up auto-enrolment for the first time.
  • Workforce size: NEST must accept all employers; some other providers have minimum or maximum workforce requirements.
INFORMATION

NEST is the default if you are unsure

If you cannot decide which scheme to use, NEST is a safe choice. It is government-backed, must accept all employers regardless of size, and is designed specifically for auto-enrolment. You can always switch to a different provider later.

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