The Consumers Association has said the government should freeze the one per cent ceiling on simple pension charges.

When stakeholder pensions were launched in 2001, the government stipulated that they should have a single charging structure with a maximum annual fee of one per cent.

But there were many providers which did not backdate the changes, leaving their existing customers still suffering the old charges on their previous contributions.

Experts say that switching to a different pension plan could reduce their costs and get their money working harder for them.

Previously, pension companies had managed to pile on charges in several ways – through bid/offer spreads, allocation rates, and policy fees as well as annual management charges – making it almost impossible for savers to know exactly how much they pay in total costs.

The introduction of stakeholder pensions forced pension companies to make the charging structures on all their pension policies more competitive. Several of the leading pension companies, including Legal & General, Norwich Union, and Standard Life also decided to reduce the on-going charges on policies that were already on their books.

Andy Agar, head of retirement product development at Legal & General, said: “People with old style pensions taken out before the introduction of lower cost stakeholder pensions could potentially save hundreds, if not thousands, of pounds by transferring their pensions to cheaper plans.”