Nearly two in five (38 per cent) small and medium-sized enterprises (SME) are considering switching their pension provider within the next three years, as employers place greater scrutiny on performance, cost and service delivery, analysis from People’s Pension has shown.

The findings highlighted a growing willingness among smaller employers to review workplace pension arrangements, driven by operational pressures and rising expectations of providers.

A dip in investment performance was identified as the most significant trigger for switching, cited by 32 per cent of respondents, while cost and regulatory or policy changes followed closely behind at 31 per cent each.

The research also found that a quarter (25 per cent) of SMEs would consider switching following a recommendation from a trusted adviser or peer, or due to employee dissatisfaction, underlining the importance of reputation and service quality alongside value for money.

However, despite the level of switching intent, employers indicated that improvements in communication and support could reduce the likelihood of moving provider.

Indeed, nearly half (45 per cent) said better communication or education for employees would make them less likely to switch, while two in five (40 per cent) pointed to the need for greater employee support, including financial wellbeing services.

People’s Pension said the findings reflected the operational realities faced by SMEs managing payroll, regulatory requirements and employee engagement with limited internal resources.

Commenting on the findings, People’s Pension distribution director, Stuart Reid, noted that employers were increasingly sensitive to friction in pension provision.

“Employers are under pressure to keep payroll and benefits running smoothly, often with limited time and resources to deal with complexity or inconsistent performance,” he said.

“When pension provision becomes a source of friction, switching quickly moves onto the agenda," he observed, adding that while investment performance and cost remained fundamental, 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."

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