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Comparing Auto Enrolment with Traditional Employer Pension Schemes


With the introduction of Auto Enrolment, many employers are wondering whether they should stick with their existing pension schemes or switch to the new system. In this blog post, we will compare the Auto Enrolment scheme with traditional employer-sponsored pension schemes to help you make an informed decision.

Auto Enrolment Overview

  • Government Top-Up: The government will contribute one-third of the employee’s contribution.

  • Fixed Contribution Rates: Contributions start low and gradually increase over ten years.

  • Limited Investment Choices: Employees have a choice of low, medium, and high-risk funds.

Employer-Sponsored Pension Schemes

  • Higher Tax Relief: Employees can benefit from up to 40% tax relief.

  • Flexibility: Employers can set their own contribution rates and offer additional benefits like early retirement options.

  • Wider Investment Options: Typically, more investment choices are available, allowing for tailored retirement plans.

Key Differences

  1. Tax Relief: Traditional schemes offer higher tax relief compared to Auto Enrolment’s 25%.

  2. Flexibility: Employer schemes can provide more tailored benefits and investment options.

  3. Administrative Complexity: Auto Enrolment is managed by the National Automatic Enrolment Savings Authority, potentially reducing administrative burdens for employers.

What’s Best for Your Business?

The best choice depends on your specific circumstances:

  • Existing Pension Schemes: If you already have a well-functioning pension scheme, you may prefer to continue with it.

  • New to Pensions: If you don’t currently offer a pension, Auto Enrolment provides a straightforward way to start.


Both Auto Enrolment and traditional employer-sponsored pension schemes have their pros and cons. It’s essential to assess your business needs and employee preferences before making a decision. For personalised advice, contact us today.



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