The Association of British Insurers (ABI) has downplayed the impact of charges on pension pots, pointing instead to the importance of increasing contributions and saving earlier.
In a report published today, Time to Act: Tackling our Savings Problem and Building our Future, the industry body said that most people entering auto-enrolment would face a low annual management charge.
The report comes after the National Association of Pension Funds (NAPF) put charges at the top of its agenda, proposing an easy to understand "pounds and pence" standardised charge schedule for funds, insurers, schemes and advisers to adhere to.
It said: "It is sometimes suggested that pension charges are still very high and complex, making a huge dent in the savings pot that people accumulate. This does not hold true for modern pension schemes."
The ABI surveyed 95% of the contract-based market, including the eight largest pension providers, and found that the average charge across all schemes set up for auto-enrolment is an AMC of 0.52%, while for already established schemes the average is an AMC of 0.77%. The highest charge was 2.11% and the lowest was 0.3%.
It also found that consumers think contributions and investment returns rank higher in importance than charges to the value of their savings, with over two-thirds of people recognising the level of their contributions has the biggest impact on the size of their pension.
It stated: "What makes most difference to people's retirement income is how much they save, and how long for."
The report said increasing an annual pension contribution from 8 to 12% can increase a pension pot by 50%, while delaying starting pension saving by five years can reduce a final pension pot by 17%.
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