29 Sep Is Your Workplace Pension Just Doing the Minimum? How One Employer Turned It Into an Employee Benefit
For many employers, setting up a workplace pension begins with a legal requirement. You need a qualifying scheme. Employees need to be enrolled. Contributions need to reach the right place each month. Once that’s working, it’s understandable that the pension can simply sit quietly in the background.
But could it be doing more?
One business we worked with already had an established workplace pension for approximately 40 employees. The scheme was doing what it was supposed to do, but a conversation with their accountant prompted the business owner to look at it again. What started as a discussion about salary sacrifice eventually became a much bigger question:
Could their workplace pension become something employees genuinely valued as part of working for the company?
They already had a workplace pension. So why review it?
The company was using NEST and had been doing so successfully for its automatic-enrolment responsibilities. There wasn’t a problem that urgently needed fixing. The conversation actually began with the company’s accountant.
The accountant had previously worked with Dan Williams at Macon Financial Planning to review their own workplace pension arrangements. Having been through the process themselves, they felt there could be an opportunity to help their client explore something similar.
Initially, the employer was particularly interested in introducing salary sacrifice and the potential National Insurance benefits this could provide. But when Dan spoke to the business owner and the people responsible for looking after the company’s employees, it became clear that their ambitions went beyond that. They wanted the pension to feel like a more considered part of their overall employee benefits package.
What could a different workplace pension offer their employees?
Before recommending anything, Dan reviewed the company’s existing pension and spent time understanding what the employer wanted the new arrangement to achieve. He then carried out research across the market and considered the different options available.
The scheme ultimately recommended offered several features the employer felt would be valuable to its workforce. These included a considerably wider investment range, with more than 200 additional fund options available compared with their previous arrangement.
Employees also gained access to a modern app where they could:
- See the current value of their workplace pension;
- Monitor how it was performing;
- View projections of what it could potentially provide in the future;
- Consider their forecast retirement position; and
- Manage information such as their beneficiary nominations.
Employees didn’t have to become investment experts or choose their own funds. But for those who wanted to engage more closely with their pension, there were considerably more options available to them. That was important to the employer. They wanted their pension to feel less like something that simply happened on a payslip each month and more like a benefit employees could actually see and engage with.
Was this simply about finding a cheaper pension?
No. Cost is an important consideration when reviewing any pension scheme, but it shouldn’t necessarily be considered in isolation.
The two arrangements in this case had different charging structures. At the time of the review, NEST applied a 1.8% charge to contributions together with a 0.3% annual management charge. Those remain NEST’s published headline member charges today.
The new scheme did not apply an initial contribution charge but had an ongoing annual management charge of approximately 0.63%. That means it would be misleading simply to describe one scheme as cheaper than the other. Different charging structures can affect different employees differently depending upon factors including contribution levels, the value of their pension and how long it remains invested.
For the employer, the decision wasn’t about finding the pension with the lowest headline percentage. It was about considering cost alongside the service, technology, investment options, support and features available to employees. That’s also consistent with guidance from The Pensions Regulator, which encourages employers to weigh costs and charges against the services a scheme provides.
Where did salary sacrifice fit in?
The new arrangement also allowed the employer to introduce pension contributions through salary sacrifice for employees who were eligible to participate. Under a salary sacrifice arrangement, an employee agrees to reduce part of their contractual cash salary and the employer makes an equivalent pension contribution. Under the current rules this can, in some circumstances, reduce National Insurance costs for both the employer and employee.
Importantly, salary sacrifice wasn’t appropriate for everybody within this particular workforce. Some employees’ earnings meant sacrificing salary would have taken their cash earnings below National Minimum Wage requirements. They were therefore unable to participate in salary sacrifice, but could continue contributing to the workplace pension using the normal contribution method.
That meant the employer could introduce salary sacrifice without preventing those employees from continuing to benefit from the new pension arrangement. Salary sacrifice must not reduce an employee’s cash earnings below National Minimum Wage, something employers need to consider carefully when setting up an arrangement.
A forthcoming change is also worth being aware of: from April 2029, the National Insurance exemption applying to employee pension contributions made through salary sacrifice is due to be capped at £2,000 per year. Salary sacrifice arrangements will still be possible, but National Insurance will apply differently above that level.
What was involved in changing the workplace pension?
Choosing a provider was only one part of the process.
Dan:
- reviewed the employer’s existing NEST arrangement;
- established what the business wanted its pension to achieve;
- carried out whole-of-market research;
- presented his recommendation to the business owner;
- worked with the company’s accountant and payroll team;
- liaised with the new pension provider;
- helped coordinate communications for employees; and
- visited the workplace to explain the new arrangement to the staff as a group.
Because the company’s accountants also operated its payroll, they were closely involved in implementing the new contribution arrangements. The employer found the transition relatively straightforward. That matters.
A new pension scheme might look attractive on paper, but an employer also needs to consider how easily it will work alongside payroll and how clearly it can be communicated to employees. The Pensions Regulator identifies both payroll compatibility and member communications as considerations when employers choose a pension scheme.
What happened to employees' existing NEST pensions?
They weren’t automatically transferred. Moving an employer’s future workplace pension contributions to a new scheme doesn’t mean every employee’s existing pension should simply be moved with it. Whether combining an old workplace pension with another pension is appropriate depends upon the individual’s circumstances and the features and benefits of the pensions concerned.
Employees who wanted to explore their existing pensions could therefore discuss their own position separately. The company-level recommendation and an individual employee’s personal pension decisions are two different things.
The employer could now talk about the pension differently
Perhaps the most interesting outcome wasn’t a technical pension feature at all. Before the review, the pension was primarily something the employer needed to provide. Afterwards, the business owner felt much more comfortable talking about it as a positive employee benefit.
The company now discusses its workplace pension when interviewing prospective employees as part of the overall employment package it provides. That doesn’t mean a workplace pension alone will recruit or retain good employees.
But salary isn’t necessarily the only thing somebody considers when deciding where they want to work. Pensions, holidays, flexible working and other benefits can all form part of the overall proposition an employer chooses to offer its people.
For this business, reviewing its pension gave it another benefit it felt was worth talking about.
And the support didn't stop when the scheme went live
The employer subsequently chose to add an optional workplace financial clinic provided by Macon Financial Planning for an additional fee. Dates are agreed with the company’s management team and Dan spends a full day at the workplace. Employees are offered individual time slots during the day to talk to him.
The conversations have varied considerably. Some employees have needed ten minutes to ask a question about their workplace pension. Others have wanted to talk about an old pension and whether consolidation might be worth considering. There have also been questions about mortgages, retirement, wider finances and the other services Macon provides.
The clinic doesn’t mean every employee suddenly needs financial advice. Sometimes somebody simply has a question they’d like answered. Where an employee does have a more complex need and wants personal financial advice, they can choose whether they would like to engage Macon separately.
For the employer, it provides another way of giving staff access to professional financial expertise through the workplace.
Do employers have to use NEST, NOW: Pensions or The People's Pension?
No. These are well-known workplace pension providers and may be entirely appropriate for many businesses. But they aren’t the only options available.
The Pensions Regulator makes clear that employers should consider different schemes when deciding what’s suitable for their business and employees. Defined contribution arrangements available to employers can include both master trusts and group personal pensions.
An existing scheme may turn out to be perfectly appropriate. But an employer doesn’t necessarily know that until it has considered what it wants its workplace pension to achieve and compared the available options.
Could your workplace pension offer your employees more?
If you already have a workplace pension, you don’t necessarily need to change it.
But it can be worth asking a few questions:
- When was the scheme last properly reviewed?
- What do your employees actually get from it?
- How easy is it for them to understand and engage with their pension?
- Does the scheme provide the investment choices and technology you would like?
- Could salary sacrifice be appropriate for some of your employees?
- How well does the scheme work with your payroll arrangements?
- Do your employees have access to support when they have questions?
- Is your workplace pension something you’d actively talk about when recruiting somebody?
If the answer to some of those questions is “I’m not sure”, that may be a good reason to review what you currently have.
Would you like us to review your workplace pension?
Dan Williams works with employers to establish and review workplace pension arrangements, from smaller businesses through to employers with larger workforces.
The starting point isn’t choosing a pension provider. It’s understanding what you’d like your workplace pension to do for your business and the people who work for you. From there, we can review your existing arrangements, research the options available and help you understand whether there are changes worth considering.
We can also work alongside your accountant and payroll provider to help coordinate the practical side of implementing a new arrangement.
You can call Macon Financial Planning on 01270 250900, send us an enquiry and ask us to call you, or arrange an initial conversation with Dan to discuss your existing workplace pension.
Workplace pension schemes are regulated by The Pensions Regulator
This case study is based on a real client’s experience, with identifying details omitted to protect their privacy. It illustrates one particular set of circumstances and should not be taken as an indication that the same outcome will apply to every employer or employee.
Workplace pension arrangements, charges, investment options and available features vary between providers. The suitability of a pension scheme will depend upon the circumstances and requirements of the employer and its employees.
Salary sacrifice may not be suitable or available for every employee and must not reduce cash earnings below the applicable National Minimum Wage. Salary sacrifice can also affect entitlement to certain earnings-related and statutory benefits. The rules applying to pension salary sacrifice are due to change from April 2029.
A pension is a long-term investment, the fund value may fluctuate and can go down. Your eventual income may depend upon the size of the fund at retirement, future interest rates and tax legislation.
Transferring or consolidating an existing pension may not always be suitable. Individual advice should be sought where appropriate before making changes to existing pension arrangements.
This article is for general information only and does not constitute personal financial advice.
Approved by 2plan wealth management Ltd on 21/09/2026
Dan Williams
Chartered Financial Planner