Jessica BirdNearly two in five small and medium-sized enterprises (SMEs) are considering switching pension provider within the next three years, according to research from People’s Pension, as employers reassess performance, cost and service standards.
The research found that 38% of SMEs said they were likely to review their current pension arrangements, signalling a growing willingness to switch providers in response to operational pressures and changing expectations.
A dip in investment performance emerged as the most significant trigger, cited by 32% of respondents. Cost and regulatory or policy changes followed closely, each highlighted by 31% of employers, underlining the importance of value for money and compliance in decision-making.
A further 25% of SMEs said they would consider switching based on a recommendation from a trusted adviser or peer, or due to employee dissatisfaction, pointing to the role of service quality and reputation alongside financial performance.
People’s Pension said the findings reflect the operational challenges faced by SMEs, many of which are managing payroll, regulatory requirements and employee engagement with limited internal resource.
Despite the level of switching intent, employers also identified factors that would encourage them to remain with their current provider.
Nearly half (45%) said improved communication or education for employees would reduce the likelihood of switching, while 40% said additional employee support, including financial wellbeing provision, would have the same effect.
The results suggest that employers are increasingly assessing pension provision across a combination of performance, cost and service delivery, rather than focusing solely on headline pricing.
Stuart Reid, distribution director at People’s Pension, said: “Employers are under pressure to keep payroll and benefits running smoothly, often with limited time and resource to deal with complexity or inconsistent performance.
“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.”
