Need to know:
- With continual change in the pensions landscape, employers should review their pensions strategy every three years.
- Choosing the right pension scheme and provider will depend largely, but not exclusively, on workforce demographics. Scheme design will also be based around goals such as talent retention, fairness, or reward.
- A key factor is the choice of pension providers. The most effective providers bring pensions to life with tools, education, and campaigns that help employees see the real value of saving.
Devising a workplace pensions strategy requires a careful balance of regulatory compliance, employee needs, financial sustainability, and long-term business objectives. And it is never a once-and-done event. With the pensions landscape constantly evolving, employers must continually review their pensions strategy.
The move from defined benefit (DB) to defined contribution (DC) schemes has put more responsibility on individuals, while economic pressures, including high inflation and rising national insurance (NI) contributions, impact the affordability and effectiveness of workplace pensions. Recent reforms are also reshaping the system. Saba Haran, executive director, pensions and benefits at Howden Employee Benefits, explains: “Mansion House changes aim to boost retirement outcomes through small pot consolidation and private market investments, and tax reforms coming in 2027 will alter how pension death benefits are treated. Many [employers] haven’t reviewed their schemes since auto-enrolment began, so a secondary review is essential.”
Pension goals
Pension strategy planning starts with establishing the goals of the pension scheme; the crucial one being to help employees save enough for retirement, while offering a benefit that attracts and retains talent. Compliance is a given, but employers also want a scheme that is sustainable, competitive, and supportive of employees’ long-term financial wellbeing.
Choosing the right pension scheme and provider will depend largely on workforce demographics. Tina Rahman, founder of HR Habitat, says: “An enhanced pension, for example, is far more likely to appeal to an older demographic, or to employees at any age who are already thinking long-term about their career trajectory. By contrast, if [the] organisation is chasing early-career hires who value cash-in-hand benefits, [it] may find [its] scheme doesn’t land in the way [it] expects.”
However, when it comes to the details of pension scheme design, employers should not rely solely on demographics, says Rahman. “Assuming that older staff want X, or younger staff want Y, is a fast route to bias,” she says. “Any data must be triangulated with real employee voice and external market knowledge. Too often, employers want to improve pensions without articulating why. A structured HR review will test whether the goal is attraction, retention, fairness, or reward. The design flows from there.”
Finding the right scheme and provider is ultimately about balance and ensuring that the proposition is financially sound, while meeting the needs of a diverse workforce.
Jason Cannon, corporate consulting team leader at Gallagher, says: “Most employers start by asking what matters: ensuring any fees represent good value for money, offering flexibility, or maximising retirement outcomes. Often, it’s a combination of all three. From there, they’ll weigh up provider charges, governance, commitment to market and especially the quality of default investment strategies, since that’s where most employees end up.
Ease of use
The best schemes also feel relevant and easy to use, which entails offering straightforward digital tools, a sensible choice of investments and clear support materials that don’t drown people in jargon. “Of course, reputation and reliability matter too as employers want a partner with a strong track record in DC schemes,” adds Cannon. “Ultimately, the most effective providers bring pensions to life with tools, education, and campaigns that help employees see the real value of saving.”
Employers also need to plan carefully for the costs, for example, contribution levels of both the organisation and employee, types of DC pension schemes, retirement outcomes, and communication methods.
Natasha Newby, employee benefits director at Ilumiti, says: “In terms of charges, employers should do their homework and benchmark with other organisations and negotiate with providers to achieve the best deal for members. In terms of contribution levels, the legal minimum is 3% employer and 5% employee, but do these go far enough for [the] organisation? Do they align with [the] employer value proposition? Are competitors offering more? An attractive pension can be a powerful recruitment and retention tool.”
Pensions review
Employers should review their workplace pension every three years to check how the funds have performed and compare them with other providers, according to Terry Kemp, pensions and benefits expert at Aslan. “An effective pensions strategy isn’t separate from pay; it’s part of the wider conversation around financial wellbeing,” he says. “Helping employees see how their pension works hand-in-hand with their pay packet is the key to driving engagement and making the benefit genuinely valued.”
Just as important is communication; explaining everything in plain English and linking pensions back to take-home pay today, not just retirement in 30 years. Kemp adds: “Technology has also accelerated with pension providers; member apps help with engagement, however, certain pension providers have yet to implement tools to allow members to view live valuations of their pots.”
