Nest vs People's Pension vs Smart Pension: Which is Best for Your Business?
Compare the UK's top 3 auto-enrolment pension providers. Detailed comparison of Nest, People's Pension, and Smart Pension - fees, features, and which to choose.
Choosing the right auto-enrolment pension provider is crucial. Here's a detailed comparison of the UK's three most popular options.
Quick Comparison Table
| Feature | Nest | People's Pension | Smart Pension |
|---|---|---|---|
| Setup cost | Free | Free | Free |
| Contribution charge | 1.8% | None | None |
| Annual management | 0.3% | 0.5% | 0.75% |
| Monthly member fee | None | None | £1 per member |
| Minimum contribution | £1 | £1 | £1 |
| Investment options | 5 funds | 11 funds | 10+ funds |
| ESG options | Yes | Yes | Yes |
| Payroll integration | Basic | Good | Excellent |
| Mobile app | Basic | Good | Excellent |
| Customer support | Average | Good | Excellent |
| Best for | 1-5 employees, simple needs | 6-20 employees, balance of cost/features | 20+ employees, tech-savvy businesses |
Detailed Comparison
1. Nest (National Employment Savings Trust)
Overview: Government-backed pension scheme launched in 2012. Simple, reliable, but basic features.
Costs
| Fee Type | Amount | When Charged |
|---|---|---|
| Setup | £0 | - |
| Contribution charge | 1.8% | On each contribution (employer + employee) |
| Annual management | 0.3% | On pot value annually |
| Monthly member fee | £0 | - |
| Transfer out | £0 | - |
Example Costs:
- £100 monthly contribution: £1.80 charge per month
- £10,000 pot: £30/year management charge
- First-year total on £1,200 contributions: £21.60 + £30 = £51.60
Features
✅ Pros:
- Government-backed (extra security)
- No monthly per-member fees
- Simple setup (no credit checks, no vetting)
- Can't reject any employer
- Public sector bodies must use Nest by default
- No transfer-out fees
- Accepts all ages (16-75)
❌ Cons:
- 1.8% contribution charge adds up (highest of the three)
- Limited investment options (5 funds)
- Basic online platform
- No auto-enrolment automation (manual uploads)
- Basic reporting
- Slower customer service
Best For
- Micro-businesses (1-5 employees)
- Employers who rarely make changes
- Businesses with simple payroll needs
- Public sector organizations
- Charities and community groups
Investment Options
- Nest Retirement Date Funds (default) - 95%+ members use this
- Nest Pre-Retirement Fund
- Nest Higher Risk Fund
- Nest Lower Growth Fund
- Nest Sharia Fund
All funds have ethical screening (no controversial weapons).
2. People's Pension
Overview: Run by B&CE, the industry pension scheme. Mid-market option with good balance of cost and features.
Costs
| Fee Type | Amount | When Charged |
|---|---|---|
| Setup | £0 | - |
| Contribution charge | £0 | - |
| Annual management | 0.5% | On pot value annually |
| Monthly member fee | £0 | - |
| Transfer out | £0 | - |
Example Costs:
- £100 monthly contribution: £0 charge
- £10,000 pot: £50/year management charge
- First-year total on £1,200 contributions: £0 + £50 = £50
Lower cost than Nest for contributions over ~£3,000/year
Features
✅ Pros:
- No contribution charges (better for larger contributions)
- 11 investment options (more choice)
- Good online platform
- Decent payroll integration
- App available
- Good customer service
- Member communications handled
- No monthly fees per member
❌ Cons:
- Slightly higher annual management (0.5% vs Nest's 0.3%)
- Not government-backed (though very secure)
- Some smaller employers find it complex
- Setup takes longer than Nest
Best For
- Small to medium businesses (6-50 employees)
- Employers making regular changes
- Businesses wanting better features without complexity
- Construction industry (B&CE's traditional base)
Investment Options
Default: Target Retirement Date Funds (automatic de-risking)
Self-select funds:
- Conservative Growth
- Cautious Growth
- Balanced Growth
- Adventurous Growth
- Equity Growth
- Pre-Retirement (5 years to retirement)
- Cash
- Shariah funds
- Ethical funds (3 options)
More choice than Nest, less complexity than Smart Pension
3. Smart Pension
Overview: Modern tech-focused provider. Best integration, features, and service. Slightly higher cost.
Costs
| Fee Type | Amount | When Charged |
|---|---|---|
| Setup | £0 | - |
| Contribution charge | £0 | - |
| Annual management | 0.75% | On pot value annually |
| Monthly member fee | £1 per active member | Monthly |
| Transfer out | £0 | - |
Example Costs (10 employees):
- £100 monthly contribution per employee: £0 charge
- £10,000 average pot: £75/year per employee
- Monthly member fees: £1 × 10 = £10/month = £120/year
- Total annual cost: (£75 × 10) + £120 = £870
vs People's Pension: (£50 × 10) = £500 vs Nest: Varies by contribution size
Features
✅ Pros:
- Excellent payroll integration (auto-sync)
- Best-in-class app and online platform
- Automatic communications
- Real-time reporting and dashboards
- Auto-calculation of contributions
- Excellent customer support
- 10+ investment options
- ESG scoring on all funds
- Fast setup (24-48 hours)
- Auto-enrolment automation
❌ Cons:
- Monthly per-member fees (£1 each)
- Higher annual management charge (0.75%)
- Most expensive for small pots/low contributions
- Overkill for very small businesses
Best For
- Medium to large businesses (20+ employees)
- Tech-savvy businesses
- Companies with complex payroll
- Businesses making frequent changes
- Employers wanting automation
- Companies who value service quality
Investment Options
Default: Smart Retirement Fund (target date funds)
Self-select:
- Global Equity
- UK Equity
- Diversified Growth
- Cautious Growth
- Annuity Protection
- Cash
- Ethical funds (5 options)
- Shariah funds (3 options)
- Property
- Alternative assets
Most choice and flexibility
Cost Comparison: Real Examples
Scenario 1: Micro Business (3 employees, £25k salaries)
Contributions: 8% total (3% employee, 5% employer) = £2,000/year per employee
| Provider | Year 1 Cost (All 3 Employees) | Year 5 Cost (£12k pots) |
|---|---|---|
| Nest | £108 (contributions) + £36 (0.3% on pots) = £144 | £108 + £108 = £216 |
| People's Pension | £0 + £60 (0.5% on pots) = £60 | £0 + £180 = £180 |
| Smart | £36 (members) + £90 (0.75% on pots) = £126 | £36 + £270 = £306 |
Winner: People's Pension (£60 year 1, £180 year 5)
Scenario 2: Small Business (10 employees, £30k salaries)
Contributions: 8% total = £2,400/year per employee
| Provider | Year 1 Cost (All 10 Employees) | Year 5 Cost (£15k pots) |
|---|---|---|
| Nest | £432 + £120 = £552 | £432 + £450 = £882 |
| People's Pension | £0 + £200 = £200 | £0 + £750 = £750 |
| Smart | £120 + £300 = £420 | £120 + £1,125 = £1,245 |
Winner: People's Pension (£200 year 1, £750 year 5)
Scenario 3: Medium Business (50 employees, £35k salaries)
Contributions: 8% total = £2,800/year per employee
| Provider | Year 1 Cost (All 50 Employees) | Year 5 Cost (£17k pots) |
|---|---|---|
| Nest | £2,520 + £600 = £3,120 | £2,520 + £2,550 = £5,070 |
| People's Pension | £0 + £1,000 = £1,000 | £0 + £4,250 = £4,250 |
| Smart | £600 + £1,500 = £2,100 | £600 + £6,375 = £6,975 |
Winner: People's Pension (£1,000 year 1, £4,250 year 5)
Note: Smart Pension's better integration may save payroll admin time worth £500+/year
Feature Comparison
Payroll Integration
| Feature | Nest | People's Pension | Smart Pension |
|---|---|---|---|
| Auto-sync with payroll | ❌ Manual upload | ✅ Good | ✅ Excellent |
| Real-time contribution tracking | ❌ | ✅ | ✅ |
| Auto-calculate contributions | ❌ | ⚠️ Partial | ✅ |
| API integration | ❌ | ✅ | ✅ |
| Works with major software | ⚠️ Basic | ✅ Good | ✅ Excellent |
Verdict: Smart Pension wins, especially for businesses using Xero, QuickBooks, Sage, etc.
Member Experience
| Feature | Nest | People's Pension | Smart Pension |
|---|---|---|---|
| Mobile app | ⚠️ Basic | ✅ Good | ✅ Excellent |
| Online portal | ⚠️ Basic | ✅ Good | ✅ Excellent |
| Contribution visibility | ⚠️ Delayed | ✅ Good | ✅ Real-time |
| Pension projections | ✅ | ✅ | ✅ Advanced |
| Financial education | ⚠️ Basic | ✅ Good | ✅ Excellent |
| ESG information | ⚠️ Limited | ✅ Good | ✅ Detailed |
Verdict: Smart Pension wins for member engagement
Customer Support
| Feature | Nest | People's Pension | Smart Pension |
|---|---|---|---|
| Phone support | ⚠️ Long waits | ✅ Good | ✅ Excellent |
| Email support | ⚠️ Slow | ✅ Good | ✅ Fast |
| Live chat | ❌ | ⚠️ Limited | ✅ |
| Dedicated account manager | ❌ | ⚠️ 50+ employees | ✅ 20+ employees |
| Online help resources | ⚠️ Basic | ✅ Good | ✅ Excellent |
Verdict: Smart Pension wins on service
Which Should You Choose?
Choose Nest if:
✅ You have 1-5 employees ✅ Contributions are small (under £2,000/year per employee) ✅ You want simplest possible setup ✅ You rarely make changes ✅ You value government backing ✅ You're a public sector body (required)
Example: Solo trader with 2 part-time employees
Choose People's Pension if:
✅ You have 6-50 employees ✅ You want balance of cost and features ✅ You make regular changes ✅ You want better investment choice than Nest ✅ You're in construction industry ✅ You want good service without paying premium
Example: Independent pub with 12 staff
Choose Smart Pension if:
✅ You have 20+ employees (or 6+ if tech-savvy) ✅ You value integration and automation ✅ You make frequent changes ✅ You want best member experience ✅ You want excellent service ✅ Payroll admin time is expensive for you ✅ You want advanced reporting
Example: Growing tech startup with 25 employees
Switching Providers
Can I Switch?
Yes! You can change auto-enrolment provider at any time.
Process
- Choose new provider and complete their setup
- Transfer employee data to new provider
- Notify employees of the switch (60 days' notice recommended)
- Stop contributions to old provider
- Start contributions to new provider
- Employees decide whether to:
- Transfer old pot to new provider (most common)
- Keep old pot where it is (tracking two pots)
Costs
- No exit fees from any of these three providers
- Transfer-out fees: £0 for all three
- Setup costs with new provider: £0
Timeline
- Setup with new provider: 1-2 weeks
- Data migration: 1-2 weeks
- Employee notification period: 60 days (recommended)
- Total: Allow 12 weeks for smooth transition
Reasons to Switch
Common reasons employers switch:
- Cost savings (e.g., Nest → People's Pension for larger contributions)
- Better features (e.g., Nest → Smart Pension for automation)
- Poor service (long wait times, errors, bad portal)
- Payroll integration (manual uploads becoming unmanageable)
- Business growth (outgrown basic provider)
Common Questions
Can employees be in different schemes?
Technically yes, but don't do it:
- Complicates payroll
- Hard to administer
- Confusing for employees
- No real benefit
Exception: Historical legacy - employees hired before a switch might remain in old scheme.
What about funds performance?
All three providers' default funds perform similarly:
- 5-7% annual returns over 10 years
- Similar risk profiles
- Automatic de-risking as retirement approaches
Differences are marginal - focus on costs and features, not tiny performance differences.
Are my employees' pensions safe?
Yes, all three are very safe:
- Nest: Government-backed, regulated by FCA
- People's Pension: Master trust, FCA-regulated, member funds protected
- Smart Pension: Master trust, FCA-regulated, member funds protected
All three have:
- Independent trustees
- Regular audits
- FSCS protection (for administration failures)
- Ring-fenced member assets
Can I use multiple providers?
For different subsidiaries: Yes, common for group companies
For same employee group: No, administratively impossible
What if I'm currently using a different provider?
Other providers include:
- The People's Pension (different from People's Pension - similar costs)
- Now: Pensions (similar to Smart Pension)
- Scottish Widows (master trust)
- Aviva (group personal pension)
- Legal & General (master trust)
The three covered here (Nest, People's Pension, Smart Pension) represent 70%+ of the SME market.
Decision Framework
Use this flowchart:
1. How many employees?
- 1-5: → Nest or People's Pension
- 6-20: → People's Pension
- 21+: → Smart Pension or People's Pension
2. What's your priority?
- Lowest cost: → People's Pension (usually)
- Best features: → Smart Pension
- Simplest: → Nest
3. How tech-savvy are you?
- Basic needs: → Nest
- Moderate: → People's Pension
- Want automation: → Smart Pension
4. How often do you make changes?
- Rarely: → Nest
- Monthly: → People's Pension
- Frequently: → Smart Pension
5. What's your payroll software?
- Manual/spreadsheet: → Nest
- Sage/Xero/QuickBooks: → Smart Pension or People's Pension
- Payroll bureau: → Ask them (they'll have preferences)
Quick Recommendation by Business Type
| Business Type | Recommended Provider | Why |
|---|---|---|
| Sole trader + 1-2 employees | Nest | Simplest, lowest cost for small numbers |
| Retail/Hospitality (10-30 staff, high turnover) | People's Pension | Balance of cost/features, good for frequent changes |
| Professional services (20+ staff) | Smart Pension | Excellent integration, worth the cost for efficiency |
| Construction | People's Pension | Industry heritage, good for mobile workforce |
| Tech startup | Smart Pension | Modern platform, API integration, member app |
| Charity | Nest or People's Pension | Cost-conscious, People's Pension if 10+ employees |
| Manufacturing (50+ employees) | Smart Pension or People's Pension | Depends on payroll complexity |
Summary
Nest: Simple, government-backed, best for micro-businesses with small contributions.
People's Pension: Best value for most SMEs (6-50 employees), good balance of cost and features.
Smart Pension: Premium option with excellent features, worth the extra cost for 20+ employees or tech-focused businesses.
Most common choice: People's Pension (35% market share for SMEs)
Fastest growing: Smart Pension (best technology and service)
Can't go wrong: All three are legitimate, safe, regulated providers. Choose based on your business size, needs, and budget.
For more information:
Frequently Asked Questions
- Which is cheaper: Nest, People's Pension, or Smart Pension?
- Smart Pension typically has the lowest total costs (0.75% annual + £1/member/month). People's Pension charges 0.5% annual. Nest charges 1.8% on contributions plus 0.3% annual. The cheapest option depends on contribution sizes and member count.
- Can I switch from Nest to another provider?
- Yes, you can switch auto-enrolment providers at any time. Employees can keep their existing Nest pot or transfer it to the new provider. Most employers switch to access better features, lower costs, or improved service.
- Which pension provider is best for small businesses?
- For 1-5 employees, Nest or People's Pension are simplest (no monthly fees per member for Nest). For 6+ employees with good payroll integration, Smart Pension often offers better value and features.
- Is Nest a good pension scheme?
- Yes, Nest is a reliable government-backed scheme with simple setup and no monthly fees. However, it has higher total costs than competitors for larger contributions, fewer investment options, and a basic online platform.