Workplace pension types: what advisers need to know

We break down the main types of workplace pension, how they work in practice, and how to help your employer clients choose the right solution.

Published: 18 May 2026

Key points for advisers

Your role is to help employers select a scheme that balances regulatory duties, workforce needs and long‑term value.
It's important to make sure that employer clients are familiar with the differences between defined contribution (DC) and defined benefit (DB) workplace pensions.
Flexibility varies by scheme type, so understanding employee demographics and retirement needs remains central to good advice.

The main types of workplace pension schemes

Workplace pensions sit at the heart of an employer’s reward and compliance strategy. While the core aim is retirement saving, your clients need to understand the way schemes are structured and the differing risks they place on employers and employees.

Defined contribution (DC)

DC schemes are now the default for workplace provision.

Outcomes at retirement are driven by investment performance, contribution levels and charges, making governance, defaults and ongoing suitability critical considerations for advisers.

Defined benefit (DB)

DB schemes are now largely legacy arrangements. They provide members with a guaranteed retirement income linked to salary and service, shifting investment and longevity risk to the employer. While they offer certainty for members, they remain complex and costly to fund and administer, requiring specialist oversight.

Current trends shaping workplace pension advice

Auto‑enrolment has significantly expanded DC participation, but it has also left many employees with multiple pension pots. This is driving demand for consolidation and better member engagement — an area where advisers can add real value by helping employers select schemes that support transfers and long‑term member outcomes.

The Pension Freedoms, introduced in 2015, accelerated accelerated the shift to DC by giving members more flexibility at retirement. With options now extending beyond annuities to drawdown and lump‑sum access, scheme design and member communications play a bigger role in supporting informed decisions.

We’re also seeing a continued move towards Master Trusts. Scale brings stronger governance, independent trustees and operational efficiencies — all key factors when advisers are assessing value for money and regulatory robustness for employer clients.

Sustainable investing continues to grow in importance, but it’s rarely the sole driver. Employers and members increasingly expect access to a broad, well‑governed fund range — spanning ESG, ethical and traditional options — across different risk profiles to support diverse needs and preferences.

As ever, investment risk remains. Pension values can fall as well as rise, and members may receive less than they contribute — reinforcing the importance of clear defaults, governance and ongoing review.

Supporting clients with workplace pension provider selection

When you're advising these are the core areas that typically matter most to employers and regulators alike:

Scheme charges and overall value for money
Investment design, defaults and self‑select fund range
Retirement and benefit options available to members
Member experience, communications and digital capability
Governance standards, compliance support and ongoing oversight