Key takeaways
- Nest charges employers nothing to set up or use the scheme, and members pay 1.8% of contributions plus 0.3% a year.
- The People's Pension charges employers a one-off £500 plus VAT, waived if you sign up through an adviser, accountant, bookkeeper or payroll professional.
- NOW: Pensions charges employers £36 a month plus VAT direct, or £12.50 to £20 a month plus VAT through a payroll bureau, and nothing when no workers are paying in.
- Smart Pension does not publish a standard employer fee; employers see their charge under Account charges after signing in.
- By law, charges in a scheme's default fund must be no higher than 0.75% a year of the member's pot.
- On a £2,000 pot with £1,500 paid in a year, member charges are roughly £16.50 at People's Pension, £30 at NOW: Pensions and £33 at Nest.
- The Pensions Regulator cannot recommend a scheme and says to check cost, tax relief method, payroll fit and whether the scheme accepts all your staff.
The cheapest workplace pension for a small employer is usually one with no employer fee: Nest charges employers nothing, and The People’s Pension is free if your accountant or payroll professional signs you up. NOW: Pensions charges a monthly employer fee. For your staff, the cheapest scheme depends on their pot size, so compare member charges on your own figures.
This page lists providers by employer fee, from lowest to highest, using prices checked on 6 November 2026. It does not rank or rate them.
Which workplace pensions cost employers the least?
Nest has no employer fee at all; The People’s Pension is free in most accountant-led set-ups. The table lists employer fees in that order.
| Provider | Employer fee | Notes |
|---|---|---|
| Nest | None | Third-party payroll or bookkeeping fees may apply |
| The People’s Pension | None via an adviser, accountant, bookkeeper or payroll professional; otherwise £500 plus VAT once | No ongoing employer fee |
| Smart Pension | Not published | Shown under Account charges once you sign in |
| NOW: Pensions | £12.50 to £36 a month plus VAT | £0 if no workers are paying in |
Nest says “We don’t charge you any fees to use Nest.” Smart Pension says its employer charges depend on your size, whether you transfer assets in and whether you join directly or through a bureau or adviser. Its new business team is on 0330 124 7409.
What does NOW: Pensions charge employers?
NOW: Pensions charges a monthly employer fee that depends on how you join. These are its published rates, all plus VAT, with no set-up fee.
| How you join | Monthly fee | Yearly cost before VAT |
|---|---|---|
| Directly | £36 | £432 |
| Payroll bureau, 5 or more active workers | £20 | £240 |
| Payroll bureau, 1 to 4 active workers | £12.50 | £150 |
If no workers are paying in during a month, the fee is £0.
What do members pay at each scheme?
Member charges come out of staff pots, so they matter as much as your own fee. Each scheme uses a different structure.
- Nest: 1.8% of each contribution plus 0.3% a year of the pot. Nest’s charges are the same for every member.
- NOW: Pensions: £2 a month plus 0.3% a year in its investment plans. The monthly fee is not taken if it would cut a pot to £100 or less.
- The People’s Pension: 0.5% a year plus £6.50 a year, less a savings reward of 0.05% to 0.3% on pots over £3,000, according to its April 2026 comparison sheet.
- Smart Pension: a total expense ratio that varies with the funds held, and possibly a small monthly fee. It does not publish standard figures on its charges page. There is no monthly fee on pots of £100 or less.
Whatever the structure, the Pensions Regulator says charges in a default fund must be no higher than 0.75% a year of the member’s pot.
Which is cheapest for your staff? Two worked examples
The answer flips with pot size. These illustrations use published charges only and ignore investment growth and transaction costs.
| Scheme | £2,000 pot, £1,500 paid in | £20,000 pot, £3,000 paid in |
|---|---|---|
| Nest | About £33 | About £114 |
| NOW: Pensions | About £30 | About £84 |
| The People’s Pension | About £16.50 | About £106.50, less the savings reward |
How the figures are worked out:
- Nest: 1.8% of contributions plus 0.3% of the pot (£27 plus £6, or £54 plus £60).
- NOW: Pensions: £24 a year plus 0.3% of the pot (£24 plus £6, or £24 plus £60).
- The People’s Pension: 0.5% of the pot plus £6.50, with no reward below £3,000. The reward on a £20,000 pot falls between 0.05% and 0.3%; the sheet does not list each band.
These are not quotes. Smart Pension is left out because its member charges are not published.
What other costs should you expect?
The scheme fee is rarely the whole cost. Budget for:
- Payroll. Your payroll software or bureau may charge for pension files. See pension payroll integration and payroll bureau vs software.
- Bookkeeping or admin. Nest says third-party administrators are likely to charge for set-up or ongoing tasks.
- Advice. Advisers should agree fees upfront.
- Exit fees. TPR notes some schemes charge an exit fee if you switch.
- Your contributions. At least 3% of qualifying earnings for each enrolled worker. Our employer pension contributions guide has worked examples.
Which applies to you?
- If you set up the scheme yourself, with no adviser, Nest has no employer fee and must accept you.
- If your accountant or bookkeeper signs you up, The People’s Pension also has no employer fee.
- If a payroll bureau runs your pensions, NOW: Pensions’ bureau rate is £12.50 to £20 a month plus VAT.
- If your staff have small, growing pots, compare contribution-based charges (Nest) with flat fees (NOW: Pensions) on your real pay.
- If you want a quote based on your size, contact Smart Pension or check its rates in the employer account.
What to do now
- List your staff, pay and likely contributions, then rerun the worked examples above on your figures.
- Ask your payroll provider which schemes it supports and what it charges for each.
- Read each provider’s charges page on the day you sign up. Prices change.
- Check TPR’s four tests: cost, tax relief method, payroll fit and whether the scheme accepts all your staff.
For more detail, see Nest vs People’s Pension, master trust pensions and our auto-enrolment guide.
Frequently asked questions
What is the cheapest workplace pension for a small employer?
Nest has no employer fee, and The People’s Pension has none if an adviser, accountant, bookkeeper or payroll professional signs you up. Which is cheapest for staff depends on their pot sizes.
Is Nest free for employers?
Yes. Nest says it charges employers no fees. Payroll providers or bookkeepers may still charge you for running it.
How much does NOW: Pensions cost an employer?
£36 a month plus VAT if you join directly, or £20 or £12.50 a month plus VAT through a payroll bureau, depending on worker numbers. There is no set-up fee.
Is there a cap on workplace pension charges?
Yes. Charges in a scheme’s default investment fund must be no higher than 0.75% a year of the member’s pot, according to the Pensions Regulator.
Can I switch to a cheaper workplace pension later?
Yes. You can move future contributions to a new qualifying scheme, but check for exit fees and update your payroll before the switch.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.