Compare 7 UK pension providers for startups: fast setup, clear fees, payroll integration

UK Workplace Pensions: A Founder's Guide to Choosing a Provider

For a UK founder, hiring your first employee triggers a cascade of new responsibilities. Amidst the rush to issue a contract and set up payroll, establishing a workplace pension can feel like a complex, low-priority task. But the clock starts ticking on your legal obligations from day one. You can see our pension compliance hub for specific rules and timelines. Failing to choose a provider quickly can lead to regulatory fines, while picking the wrong one creates hidden costs and administrative headaches a lean startup cannot afford.

Choosing the best pension providers for UK startups is not about finding the highest-yielding funds; it's an operational decision. It is about speed, cost transparency, and how easily the system integrates with tools you already use, like Xero. This guide provides a practical comparison to help you make a fast, informed choice and get back to building your business.

Understanding Auto-Enrolment in 60 Seconds

So, what exactly is this requirement? Auto-Enrolment is a UK government requirement for employers to automatically enrol eligible staff into a workplace pension scheme. Your legal duty has a specific start date, which is the day your first member of staff begins work. You can use our pension communications templates to notify your team correctly.

While the obligation is immediate, The Pensions Regulator acknowledges that it takes time to get organised. As a guideline, "The Pensions Regulator recommends allowing up to 6 months to set up a scheme." For a fast-moving startup, however, this process should be measured in days, not months.

The 3 Key Criteria for Choosing Your Startup's Pension Provider

For a time-poor founder without a finance team, three factors matter more than anything else when selecting from auto-enrolment pension options. These criteria directly address the most common pain points for early-stage businesses: missed deadlines, hidden fees, and manual administration.

1. Speed and Onboarding: Your primary goal with your first few hires is compliance. You need a provider that can get your scheme active in hours or days, not weeks. A long, paper-based onboarding process is a non-starter. This speed is your first line of defence against fines for missing auto-enrolment deadlines.
2. Transparent Costs: Unexpected fees erode your runway and can frustrate employees. You must understand the three main fee types. First are employer fees, which are often one-off setup charges. Second is the employee's Annual Management Charge (AMC), which is how most providers make money. An "Employee Annual Management Charge (AMC) is typically between 0.3% - 0.75%." Third are other transaction or contribution fees, which can be less obvious.
3. Payroll and HRIS Integration: This is the most critical operational factor when setting up a company pension scheme. The reality for most pre-seed to Series B startups is more pragmatic: a system must connect seamlessly with your existing payroll software. A provider with direct, API-based integration automates contributions, while a lack of integration leaves your team stuck with error-prone manual CSV file uploads every month.

Comparing the Best Pension Providers for UK Startups

Not all providers are built for the same stage of company. We see a clear distinction between providers optimised for getting compliant quickly and those better suited for scaling teams where employee benefits and experience become a priority. Here’s how seven of the best pension schemes for startups stack up.

Tier 1: Get Compliant Fast

These providers are ideal for pre-seed and seed-stage startups hiring their first 1 to 15 employees. The focus is on low-to-no employer costs, speed, and basic compliance.

NEST (National Employment Savings Trust)

As the government-backed scheme, NEST has a public service obligation to accept all employers, making it a reliable choice for basic compliance. Its fee structure is unique. According to NEST, "NEST charges a 1.8% fee on each initial contribution and a 0.3% AMC." This upfront charge can impact employees with smaller pension pots more significantly, but there are no setup or ongoing costs for the employer.

• Best For: Basic compliance and guaranteed acceptance.
• Employer Fees: None.
• Integration: Primarily focused on manual CSV uploads.

Smart Pension

A modern, tech-focused provider known for its strong API integrations with payroll software. This focus on automation makes it one of the most affordable pension providers in the UK from a time-saved perspective. As noted by Smart Pension, its "main fund AMC is typically around 0.75%."

• Best For: Fast setup and deep payroll integration.
• Employer Fees: None.
• Integration: Strong, API-driven connections to systems like Xero.

NOW: Pensions

This provider is another established auto-enrolment solution offering a simple path to compliance. Its fee model is a hybrid. According to NOW: Pensions, it "charges a £1.50 monthly employee administration fee combined with a 0.3% AMC." The fixed monthly fee can be less cost-effective for employees with very small balances.

• Best For: A simple, straightforward auto-enrolment solution.
• Employer Fees: None.
• Integration: Good integration with major payroll platforms.

Tier 2: Scale-Up Ready Pension Options

For Series A and B startups with 20 to 100+ employees, the pension becomes part of the overall employee benefits package. Brand, user interface, and investment choice start to matter more for attracting and retaining talent.

The People’s Pension

A solid choice for a more established startup that wants to offer a reputable scheme. This reputation comes with an initial cost, as "The People's Pension has a one-off £500 setup fee for the employer." This is often a trade-off for a well-regarded service and brand recognition among employees.

• Best For: Established brand recognition for scaling teams.
• Employer Fees: £500 one-off setup fee.
• Integration: Good integration capabilities.

PensionBee

Known for its user-friendly mobile app and modern interface, PensionBee is a strong contender for tech companies that value employee experience. According to PensionBee, its "AMC ranges from approximately 0.5% to 0.95%," depending on the plan. It excels at pension consolidation for employees with multiple small pots from previous jobs.

• Best For: Excellent employee experience and pension consolidation.
• Employer Fees: None.
• Integration: Strong, API-driven connections.

Penfold & Cushon

Other modern providers in this tier also compete heavily on user experience and mobile-first platforms. They often have a strong focus on ESG (Environmental, Social, and Governance) investment options. Their fee structures and integration capabilities are designed to appeal to the values of a scaling, tech-savvy workforce.

• Best For: Employee engagement, flexibility, and ESG options.
• Employer Fees: Varies by plan.
• Integration: Strong, API-driven connections.

The Critical Role of Payroll Integration

Choosing a provider is the first step, but effective implementation is what matters most. The single biggest day-to-day difference comes down to integration. Consider a UK SaaS startup using Xero for payroll. Here is the operational reality of choosing a provider with and without a strong integration:

With Direct API Integration (e.g., Smart Pension, PensionBee):

1. During setup, you authorise the pension provider to connect to Xero.
2. Each month, you run your payroll in Xero as normal.
3. The contribution data is sent automatically to the pension provider. The process is complete in minutes with minimal risk of human error.

With Manual CSV Uploads (e.g., NEST):

1. Run your payroll in Xero and export the pension contribution report as a CSV file.
2. Log in to your pension provider’s web portal.
3. Navigate to the contributions or uploads section.
4. Ensure the column names in your CSV file perfectly match the provider's required template.
5. Upload the file and check for validation errors, such as incorrect date formats or National Insurance numbers.
6. Once validated, you manually submit the contributions for payment.

A scenario we repeatedly see is a founder underestimating this monthly administrative burden. It quickly becomes a frustrating chore that pulls them away from core business activities. For most startups, automating this process is non-negotiable.

Your Next Steps Based on Company Stage

Your startup pension plan comparison should be guided by your current needs. Make a pragmatic choice now, knowing you can reassess as your company grows.

• Pre-Seed / First Hire: Your priority is speed and zero upfront cost. Choose a Tier 1 provider like Smart Pension for its superior integration. The goal is to get compliant and automate the process from day one.
• Series A+ / Scaling Team (20+ Employees): Your pension is now part of your employer value proposition. The employee experience, fund choices, and brand matter more. A Tier 2 provider like PensionBee or Penfold is often a better fit. A one-time setup fee can be a justifiable expense for a superior long-term platform. For ongoing duties, see the pension compliance hub for re-enrolment guidance.

Frequently Asked Questions

Q: What happens if I miss my auto-enrolment deadline?
A: The Pensions Regulator (TPR) can issue fines, starting with a £400 fixed penalty notice. If non-compliance continues, you may face escalating daily penalties that vary based on your number of employees. It's critical to act quickly to avoid these costs, even if you are already late.

Q: Can I switch my startup's pension provider later on?
A: Yes, you can switch providers. This is a common step for scaling companies that want to offer better employee benefits or need more advanced features. The process involves selecting a new scheme and arranging for the transfer of existing funds, which your new provider can typically help facilitate.

Q: What are the minimum pension contributions in the UK?
A: For auto-enrolment, the current minimum total contribution is 8% of an employee's qualifying earnings. Of this, the employer must contribute at least 3%. The employee contributes the remaining 5%, which includes government tax relief. You can choose to contribute more than the minimum as an enhanced employee benefit.