If pension providers are serious about prioritising the needs of their scheme members, then they should introduce a single pot model that ensures savers are paying the lowest rate of charges available to them, People's Partnership has said.

The message was shared after the master trust calculated that a saver with £100,000 split between two pots could pay more than £11,000 more in charges over a 20-year stretch compared with someone saving through its single pot model.

People's Partnership said a 48-year-old worker earning £40,000 a year, with a £50,000 pot and saving into a pot with a 0.75 per cent charge, would pay £15,662 in charges over 20 years.

If that same saver also had another pot with the same provider that had a charge of 0.2 per cent — The People’s Pension best price guarantee on a single pot model — then they would only pay £2,818 in charges over the same timeframe.

The People’s Pension gives members a single pot, regardless of how many times they leave and re-join the scheme, and charges the lowest rate available to them.

This means that if a member joins the master trust through an employer with a base charge of 0.3 percent, leaves the scheme and then returns with another employer on 0.5 percent, they will continue to pay a base charge of 0.3 percent on all their savings.

With the average worker having 11 jobs during a lifetime, according to government statistics, it is not uncommon for savers in workplace schemes to have multiple pension pots with the same provider and, in many cases, paying different rates of charges.

People's Partnership argued that its suggestion would therefore help people save more for retirement while also going some way towards reducing the number of small pots that are currently in circulation.

People's Partnership chief executive officer, Patrick Heath-Lay, said there are very real examples of savers who have multiple pension pots with the same provider, who are paying significantly differing charges for the same product.

"We believe that if other pension providers are really serious about putting the needs of their customers first, they should introduce the single pot model and ensure that individuals pay the lowest rate of charges available to them," said Heath-Lay.

“Our best available price guarantee is unique to the workplace pension market and will benefit millions of our members over the long term.

“As an organisation that is committed to helping its members build financial foundations for life, our members benefit from having one pot with a best price guarantee, meaning that, not only do they pay just one set of charges, but they also have a better chance of receiving a rebate on the charges they pay," he added.

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