Latest research shows your team wants more from their pension. Offering more doesn’t need to cost the earth – but it could make a meaningful difference to how your business is perceived. 

The Growing Demand for Higher Employer Pension Contributions

The 2025 Drewberry Workplace Pensions Survey found that 61% of employees who currently receive the minimum contribution want their employer to pay more into their retirement fund. As the cost of living rises and concerns over retirement security grow, workers are placing greater value on their long-term financial security. 

Additionally, 58% of employees would prefer bigger pensions over other workplace benefits, and 48% would increase their pension contributions if their employer matched them. 

Employers who recognise this shift and take proactive steps to enhance pension contributions can gain a significant competitive advantage in attracting and retaining top talent. So what’s the business case for offering enhanced contributions to your staff? And are there any cost-effective ways to add it to your benefits package?

Why Minimum Pension Contributions Aren’t Enough

The UK’s auto-enrolment scheme requires employers to contribute at least 3% of an employee’s qualifying earnings into their pension, and for employees to contribute a minimum of 5%. 

And while the majority of employees are relying on their Workplace Pension to fund their golden years , 68% don’t feel it’ll be enough for a comfortable retirement. 

Given that 32% of employees are ready to leave their current job for better benefits alone, employers need to listen to what their team is saying and look at providing a truly competitive pension scheme. 

How To Offer More Than the Minimum, Without Breaking The Bank

If your business is considering increasing pension contributions, there are several effective ways to do so – without significantly impacting your bottom line.

Offer Matching Contributions

One of the most effective ways to encourage employees to save more is to introduce a contribution-matching scheme. For example, if an employee contributes 5%, your business would match it with another 5%. 

There’s a big appetite for this among employees, as the majority said they’d be up for increasing their pension contributions if their employer matched it. When asked, 48% gave a definitive “yes”, and 40% said they’d match it “if I could afford it”. This matching system rewards loyalty and encourages long-term financial planning among employees who value it most.

Use The Salary Exchange Method

Salary Exchange Pensions (also called Salary Sacrifice) are one of the most efficient ways to pay into a Workplace Pension, saving both employees and employers money in National Insurance contributions. Which is why it’s surprising that only 19% of those surveyed are currently using this method. 

With this in mind, 52% of employees expressed a desire to learn about the tax benefits of contributing via Salary Exchange.

When employees agree to reduce their gross salary in exchange for an equivalent employer pension contribution, this results in lower taxable income, meaning employees pay less Income Tax and NI. With this method, your business benefits from lower NI contributions, which can be reinvested into your operations or used to further enhance your employee benefits.

Try Tiered Contributions Based On Seniority Or Tenure

Rewarding long-serving employees with increased pension contributions is another way to build engagement and retention. For example, you can increase contributions at key milestones, such as three, five, or 10 years of service.

Offer Flexible Contribution Options

Some employees prefer higher pension contributions over other benefits – we found this number to be as high as 58%. Providing an option to trade certain perks (such as bonuses or additional paid leave) for increased pension contributions can help cater to individual financial goals.

Communicate The Value Of Your Workplace Pension

A significant barrier to pension engagement is a lack of awareness. Almost half of employees we surveyed don’t know the exact percentage their employer contributes, or how valuable these contributions are over time. 

Providing personalised pension statements, hosting financial education workshops, and using pension calculators can help employees see the long-term benefits.

The Business Case for Enhanced Employer Contributions

While increasing pension contributions may seem like an added expense, there are compelling reasons why it should be considered an investment rather than a cost. 

• Attracting and retaining talent

84% of employees consider a strong pension plan an important factor when choosing an employer. Enhanced employer contributions can help you stand out against your competitors

• Improved employee wellbeing and productivity

Financial stress is a major concern for many workers, affecting their performance and engagement. A generous pension scheme can ease long-term financial burden, helping to create a more focused and productive workforce that feels looked after

• Tax benefits for employers

Employer pension contributions are tax-efficient, as it’s a deductible business expense. Additionally, if you set up your scheme via Salary Exchange, you can actually reduce your National Insurance bill, creating further savings. Read more about cutting your NI bill with Salary Exchange. 

Case Study: The Impact of Enhanced Contributions

Consider a business that increases its pension contribution from the statutory minimum of 3% to 6%. For an employee earning £30,000 annually, this would mean an employer contribution increase from £900 to £1,800 per year. Over a 30-year period (assuming no salary growth and an average investment return), this could result in an additional £50,000–£60,000 in retirement savings.

For the business, this increase in spend could be offset through Salary Exchange savings, saving both your business and employees money through National Insurance cuts, along with the benefits of a more engaged and loyal workforce.

Don’t Risk Losing Talent Because Of Your Pension 

The message from employees is clear – they want greater pension contributions, and they’re willing to contribute more themselves if employers step up. With financial security being a top workplace concern, businesses that prioritise enhanced pensions will benefit from a more engaged, motivated, and loyal workforce.

Offering enhanced employer pension contributions is one of the most effective ways to demonstrate a commitment to employee financial health and future security, while securing business advantages in the form of talent retention, productivity, and financial efficiency. 

Need help getting the most out of your Workplace Pension scheme? It’s what we do at Drewberry. Give us a call on 0208 432 7333, or email help@drewberry.co.uk to talk through your options with one of our friendly advisers.