NEST vs The People's Pension: which suits a small employer?

Nest and The People’s Pension are both free for most small employers and both meet the auto-enrolment rules, so the real difference is what your staff pay. Nest takes 1.8% of every contribution plus 0.3% a year of the pot. The People’s Pension takes 0.5% a year plus a £6.50 annual charge, then gives part of the 0.5% back as the pot grows.

Neither scheme is right for every employer. This page sets out the facts side by side and explains who each one tends to suit.

How do the two schemes compare at a glance?

The table below uses Nest’s own pages and the People’s Pension comparison sheet, which People’s Pension says is based on information sourced in April 2026.

Membership, asset and fund figures come from the People’s Pension comparison sheet. Check both providers’ current pages before you sign up, because charges can change.

What does Nest charge?

Nest charges members two things and nothing else: 1.8% on each new contribution and an annual management charge (AMC) of 0.3% on the total pot. The 1.8% applies to everything paid in, including employer contributions and tax relief.

Nest’s employer page says “We don’t charge you any fees to use Nest.” Payroll bureaux or other third parties may still charge you for running it.

Nest’s own example: a member who pays in £1,000 over a year and has a £10,000 pot pays £18 contribution charge and £30 AMC, so £48 in total. That is just under 0.5% of the pot.

What does The People’s Pension charge?

The People’s Pension charge has three parts: an annual charge, a 0.5% management charge, and a savings reward that refunds part of the 0.5% as the pot grows. Its April 2026 comparison sheet puts the annual charge at £6.50, not taken from pots below £106.50.

The savings reward runs from 0.05% for savings over £3,000 to 0.3% for savings over £50,000. The sheet does not list every step in between, so check the exact rate for a given pot size with the provider.

For employers, the one-off charge is £500 plus VAT. It is waived if you sign up through an adviser, accountant, bookkeeper or other payroll professional. There is no ongoing employer fee.

Which is cheaper for your staff?

It depends on pot size and how much is paid in each year. Nest’s 1.8% contribution charge bites hardest on new money; the People’s Pension 0.5% charge bites hardest on a pot that sits still.

Rough first-year figures for one employee paying £1,000 in total, with a pot of about £1,000 at the year end:

These are illustrations, not quotes. Real charges depend on when contributions arrive and how the fund performs. For larger pots, the People’s Pension rebate grows while Nest’s percentages stay fixed.

Which suits your business?

Use this as a starting point:

• If you will not use an adviser, accountant or bookkeeper to sign up, Nest avoids the £500 plus VAT People’s Pension fee.
• If your accountant or payroll bureau sets it up, both are free for you, so compare member charges and payroll fit instead.
• If your staff are short-term or low-paid, pots stay small. Look at how each charge works on small, frequent contributions.
• If staff stay for years and build larger pots, the People’s Pension savings reward reduces their charge over time.
• If you have been turned down elsewhere, Nest must accept any employer that wants to use it for auto-enrolment, under its public service obligation.

The Pensions Regulator says it cannot recommend any scheme. It suggests checking whether a scheme will accept all your staff, what it costs, which tax relief method it uses and whether it works with your payroll.

What stays the same whichever you pick?

Your legal duties do not change with the provider. You must enrol staff aged 22 to State Pension age who earn over £10,000 a year, and pay at least 3% of qualifying earnings, with 8% in total. GOV.UK puts qualifying earnings between £6,240 and £50,270 a year.

Our auto-enrolment guide covers the duties in full, and the pension tax relief calculator shows what relief adds to a contribution.

What to do now

1. Check who will sign you up. If your accountant or payroll provider will, People’s Pension’s set-up fee falls away.
2. Confirm payroll compatibility. Ask your payroll software or bureau which schemes it sends files to.
3. Model your own staff. Use typical pay and contribution levels, not averages.
4. Read the current charges pages for both providers on the day you decide.

For a wider view, see our workplace pension providers compared and the separate Nest review and People’s Pension review.

Frequently asked questions

Is Nest free for employers?

Yes. Nest says it charges employers no fees to use it. The only payments employers make to Nest are the contributions themselves.

Does The People’s Pension charge employers?

It charges a one-off £500 plus VAT, but the fee is waived if you sign up through an adviser, accountant, bookkeeper or payroll professional. There are no ongoing employer fees.

What is the Nest 1.8% contribution charge?

It is a charge of 1.8% on every payment into a member’s pot, including employer contributions and tax relief. It sits alongside the 0.3% annual management charge.

What is the People’s Pension savings reward?

It is a rebate on the 0.5% management charge that rises with pot size, from 0.05% for savings over £3,000 to 0.3% for savings over £50,000.

Can I switch from Nest to The People’s Pension later?

Yes, you can change scheme for future contributions, and members can usually transfer existing pots. Nest asks employers leaving it to give 28 days’ notice and pay any outstanding contributions.