The charges associated with the Government's National Employment Savings Trust (NEST) initiative could deter savers as they are too high and complicated, warns the Confederation of British Industry (CBI).

Businesses are concerned that staff, ironically those who are lower earners in particular, who the scheme is aimed at, will not accept the proposed charging structure, which loads fees on the earlier years after a pension is opened.

The CBI said savers could be deterred when they realise that putting money into a NEST scheme will actually leave them worse off for over a decade, compared to saving into a pension with lower average charges. This may, the industry body said, prompt those approaching retirement to think they are getting a poor deal, causing them to opt out of NEST. This will leave them with lower pensions and undermine the work the government has done in getting people to save for retirement.

"NEST is a key part of extending the offer of a good pension to everyone in the private sector," commented John Cridland, CBI deputy director-general. "The scheme is meant to be low-cost and easy to understand, so that it spurs people to start saving. But the risk is that many staff will think they are getting a raw deal, and will quit the NEST scheme.

"The next government needs to revisit the structure of these fees. We must make it easier for the low-paid to save by smoothing the cost, instead of front-loading it. The pensions time bomb is ticking loudly, and more people must be encouraged to save."

Over a longer timeframe, NEST is a cheaper option than equivalents, but CBI calculations show hat for the first 16 years after opening a pension, a saver in a private sector scheme with an AMC of 0.4 per cent and contributing £1,000 is better off than NEST. In fact, a higher AMC of 0.6 per cent will be more attractive than the NEST scheme for the first six years.

The CBI is therefore calling for the current charging structure to be changed to bring it more into line with the low-cost and simple solution that was outlined in the Turner Commission in its review of pensions in 2006.

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