Consumers may criticise high product fees, and rightly so, but on the flip side few people decide to take out a pension because it looks cheap – a middle ground it appears is needed.

If, as many suspect, pensions in the UK are sold rather than bought then these charges need to include the fact ‘salesmen’ need to be paid.

Pricing has become an important factor in the UK pensions market.

A few years ago the government decreed that stakeholder pensions should have a 1% annual charge (now 1.5% for the first ten years). The results of this example of planned economy pricing have been interesting, to say the least.

For one thing, while many life offices offered stakeholder pensions, the low charges meant that financial advisers were not remunerated via commission to sell them in large numbers.

Indeed, where life offices did pay commissions, they risked large losses as the pensions were rarely persistent enough to for commissions to be recouped.

So in sales terms, stakeholder was considered a failure.

Many employers were mandated to set up stakeholder plans for employees, but with no-one actively promoting the benefits of joining, these schemes were quickly dubbed ‘empty boxes’.

But on the positive side, charges for individual pensions became clearer, simpler and lower after stakeholder.

In the early nineties, one member of CoreData Research UK belonged to a Norwich Union pension scheme which charged £1 per contribution, then 2.15% on the remainder of the contribution with another 0.875% on underlying in-house funds.

Now a similar pension might have a single charge of 0.8% with a choice of up to 30 funds from the open market.

This focus on charges is spreading to self-invested personal pensions (Sipps), which were traditionally a more sophisticated pension vehicle for wealthy investors.

In this market segment, administration and personal service used to be more important than price.

This is not to say that Sipps had to be expensive.

Many were set up with at fixed annual cost which became increasingly good value as funds in the Sipp increased. In contrast, percentage-based fees were seen as offering poor value for very large pension funds.

However, in recent years Sipps have been actively promoted in the mass affluent sector and the regulator is taking an interest in whether a cheaper pension could have been used instead.

Sipp charges can be quite complex, depending on what services are used, so deciding if a Sipp is expensive could be tricky.

There is now parallel to pension charges developing in investment.

Exchange traded funds (ETFs), like stakeholder pensions, did, have a single fee, almost always below 1%.

Again, this means that there is no margin to pay commissions, so their sales have lagged mutual funds, where a 5% initial cost and 1-1.5% annual gives room to pay adviser remuneration.

As a result, ETFs face enormous vested interests in winning market share and there appears to be less regulatory interest in collective investment fund charging compared to pensions.

Overall, it appears that it is regulatory action and market innovation that is lowering charges, rather than direct pressure from consumers.

But in future, more knowledgeable consumers of financial products may look at charges as an important element.

Aligning the interests of the adviser with those of the consumer could also lead to sharp falls in prices in future.