Nearly two in five SMEs (38%) say they are likely to consider switching pension provider within the next three years, reflecting growing pressure on employers to review how workplace benefits support both operations and employee wellbeing.
New research from People’s Pension notes a change in how smaller organisations assess pension provision, with decisions increasingly shaped by performance, cost and the wider employee experience. As businesses manage payroll demands, regulatory change and limited internal resource, pension schemes are being evaluated not only as financial products, but as part of a broader wellbeing offer.
A dip in investment performance is the most common trigger for switching, cited by 32% of employers. Cost and regulatory or policy changes follow closely, each identified by 31%, reinforcing the ongoing impact of financial pressure and compliance demands on business decision-making.
Alongside these factors, a quarter (25%) of SMEs say they would consider switching following a recommendation from a trusted adviser or peer, or due to employee dissatisfaction. This reflects the growing importance of service quality and trust, particularly where pensions form part of an organisation’s approach to supporting staff financial wellbeing.
Employer Expectations on Support and Communication
Despite the level of switching intent, employers also identify clear factors that would encourage them to stay with their current provider. Nearly half (45%) say better communication or education for employees would reduce the likelihood of switching, while two in five (40%) point to additional employee support, including financial wellbeing provision.
These findings indicate that engagement plays a central role in how pension schemes are perceived. Where employees understand and value their benefits, employers are less likely to see pensions as a source of friction. In contrast, poor communication or low engagement can increase administrative strain and reduce the perceived value of the scheme.
With more than 100,000 employer clients and over seven million members, People’s Pension operates at significant scale, and the research reflects the operational challenges many SMEs face. Managing pension schemes alongside day-to-day business activity can place pressure on smaller teams, particularly where systems are complex or support is limited.
“Employers are under pressure to keep payroll and benefits running smoothly, often with limited time and resource to deal with complexity or inconsistent performance,” said Stuart Reid, Distribution Director at People’s Pension. “When pension provision becomes a source of friction, switching quickly moves onto the agenda.
“Investment performance and cost remain fundamental, but expectations have evolved. Employers increasingly expect providers to deliver dependable service, clear communication and meaningful support for their employees alongside strong long-term outcomes. For providers operating at scale, that means combining robust governance and investment discipline with operational resilience and support that genuinely reduces the burden on employers.”
Pension Provision Linked to Wider Wellbeing Strategy
The findings suggest that pension provision is increasingly connected to broader workplace wellbeing strategies, rather than being treated as a standalone benefit. Employers are balancing financial outcomes with usability, employee understanding and the level of support available.
As financial pressure continues to affect both businesses and households, the role of pensions within the overall employee experience is becoming more visible. Schemes that are difficult to manage or poorly understood can add to organisational strain, while those that are clear and well supported may contribute to employee confidence and engagement.
For SMEs in particular, where internal resources are often limited, the ability of a provider to reduce administrative burden while supporting employees is becoming a key consideration. The research indicates that decisions about switching are rarely driven by a single factor, but instead reflect a combination of performance, cost and the day-to-day realities of managing workplace benefits.