The government should "stand up for low-income savers" and lift the restrictions on the National Employment Savings Trust (NEST), a Conservative MP has said.
Warrington South MP David Mowat said the government should "stand up to Brussels" and make the case for setting NEST free now.
The call comes just ten days before auto-enrolment begins for the country's largest companies.
In a an exchange with pensions minster Steve Webb, Moway said NEST should have greater freedom to compete in the market for occupational pensions and was being held back by European Union regulations.
He said: "For the past two decades we have had the highest pension charges in the OECD. Part of the solution for the next two decades is NEST, yet there are a number of restrictions on its operating model that are really quite onerous, owing to an onerous interpretation of state aid rules.
"Will he [the minister] undertake to look at that again before auto-enrolment comes in, which could save many hundreds of thousands of people a lot of money?"
Webb refused to change the rules ahead of auto-enrolment. However, he said the government was monitoring the situation.
Webb said: "It is important to stress that NEST is not an end in itself, but a means to an end, and the end is making sure that all employees under auto-enrolment have access to good-quality, low-cost pension provision, not necessarily through NEST, but because of the effect of NEST in the market."
The pensions minister said the coalition was continuing with "Labour's constraints on NEST" as they were designed to encourage the national pension scheme to focus on its target market - low-income savers.
"It has therefore innovated on, for example, products and on language and has been a good thing. If we think that NEST is unable to achieve the job it is there for, we will change the rules, but the early evidence does not support that," added Webb.
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