Long-term charges on auto-enrolment (AE) schemes are costing savers up to nearly £7,000 of their pension pots over two decades of saving, Now Pensions has revealed.

It its first Auto-Enrolment Cost Comparison Index, Now Pensions found that a worker earning £28,000 and paying a monthly contribution into the Smart Pension scheme would pay £6,636 in charges over the next two decades, due to a 0.75 per cent annual management charge (AMC) levied on the saver.

However, a Smart Pension spokesman described the report as "an artful piece of propaganda" which was taken at an angle to "throw the best possible light on Now Pensions".

They added: "If you look at any piece of recently-published independent performance analysis, Now is firmly at the bottom."

PensionBee tailored plan had the second highest charge, 0.7 per cent, reducing a pension pot by around £6,200, while Now Pensions had the lowest charges of those surveyed, with an AMC of 0.3 per cent and an additional charge of £1.50 per month, resulting in charges with nearly £3,000.

Commenting on the report, Now Pensions director of policy, Adrian Boulding, said: “The AE Cost Comparison Index clearly lays out the devastating effect high fees can have on retirement savings.

“We hope our analysis will encourage employees to shop around for the AE provider that suits them best and look at fee structures over the long-term to ensure they are getting the most out of their hard-earned money.”

Now Pensions’ survey also looked at long-term charges on a single contribution or transfer-in of £28,000 from another scheme and regular contributions thereafter.

It revealed that it would cost £16,000 with Smart Pension, £14,765 with PensionBee and £7,265 with Now Pensions.

Nest was found to have the second lowest charges, at 0.3 per cent and an additional charge of 1.8 per cent, resulting in £3,700 of charges for regular savers and £8,000 for those transferring in.

Boulding concluded: “We also recommend that all savers consolidate their funds, to benefit from economies of scale where providers offer these.”

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