The National Employment Savings Trust (NEST) has reduced the upfront charge on contributions going into the scheme from 2% to 1.8%.
NEST Corporation chairman Lawrence Churchill announced the charge reduction yesterday at the annual Eversheds pensions conference.
It also confirmed the annual management charge remains at 0.3%.
The news comes after NEST chief executive Tim Jones announced the scheme's charging structure offers an 'outstanding deal' beyond the start-up loan.
NEST Corporation managing director, scheme development, Helen Dean says the slight reduction will give NEST members access to a scheme that is "approaching the best in the pensions market".
She adds: "It will give more income for members at retirement as charges can eat up pension pots."
NEST said for a median earner aged-36 charges at the NEST level are likely to be 5.8% compared with charges at the stakeholder cap of 13%.
In addition, NEST said a typical group personal pension with no commission has an average AMC of 0.5% compared with NEST's 0.3%.
This equates to a 6.6% reduction in a retirement pot for a GPP whereas with NEST the reduction is 5.8%.
NEST says once the cost of establishing the scheme had been met it anticipates the contribution element will fall away, leaving the flat AMC of 0.3% but the ultimate decision is up to trustees.
NEST's modelling revealed all groups of individuals were better under NEST with the exception of those saving for a short period at the age of 60.
The previous government announced in March the broad level of charges was likely to be an AMC of 0.3% and a contribution charge of about 2%.
Henry Tapper, director at First Actuarial, comments: "This is a Christmas special from NEST.
"The contribution charge is only going to be there for a few years, and if that is the price we pay for a good pension, then so be it.
"IFAs are not being done out of GPPs by some scurrilous cross-subsidy scheme. I think we should get behind this."
Tom McPhail, head of pensions research at Hargreaves Lansdown, adds: "NEST was brilliant before, and it is even better now. Reducing the charges even further is a positive statement of intent."
However, some industry figures were less impressed with the announcement.
Jennie Kreser, partner at law firm Silverman Sherliker, says: "The average stakeholder AMC is closer to 1.5%, so I am not totally convinced that the figures add up.
"Yes the AMC is technically cheaper but the 1.8% will be paid on contributions for the foreseeable future, so in the long run it seems more expensive."
‘Promising lead’ or ‘Back to the lab’?
Have economic cycles fundamentally changed?
Our weekly heads-up for advisers
Two global vehicles
'Further plug advice gap'