Fees attached to the Government’s auto-enrolment scheme for workplace pensions have been criticised as “a disaster for low-paid and temporary workers.”

A flat fee to administer workers’ pensions is “a complete” reversal of its original plan to charge a percentage of funds under management, a pensions expert has said.

Colm Fagan, former president of the Society of Actuaries in Ireland, said: “It means that the administration fee for someone with €20 in their account will be the same as for one with €2,000.

“Under the original plan, the charge for the smaller pot would be one-hundredth of that for the bigger one.”

He described the “regressive proposal” as “a disaster for lowpaid and temporary workers”.

“They are supposedly the main beneficiaries of auto-enrolment: charges for low-paid workers who have ceased contributions could exceed amounts in the accounts, wiping them out completely,” he said in a letter to The Irish Times yesterday.

“It is ironic that the [Department of Social Protection] prohibits commercial PRSA (Personal Retirement Savings Accounts) providers from charging a cash fee, because of its negative impact on small pots.

“It is also ironic that its UK counterpart wants ‘to protect individuals who are automatically enrolled... from high and unfair charges and limit the risk of erosion of their pension savings from such fees.’

“The Department of Social Protection here seems intent on doing the opposite.”

Finance expert and Irish Daily Mail columnist John Lowe said: “I think auto-enrolment is the most scandalous, disgraceful scheme set up to kowtow to the political parties to say they’ve done something about pensions.”

Employees will pay a minimum of 1.5% of their salary into their pension pot, which is matched by their employer.

Mr Lowe added: “At the end of ten years, the employer is paying 6%, the employee is paying 6% and the Government is going to chip in with 2%, so that’s a total of 14% after ten long years.”

Mr Lowe described the amount as “pathetic”.

Mr Fagan added: “We are now supposedly just ten months from the scheme’s launch date, yet this is the first indication we’ve got of how fees will be structured.

“There’s still no indication of their amount. It typifies the chaos that has bedevilled auto-enrolment from the start.

“It is one of the costliest projects in the history of the State – contributions from employers, employees and the State are projected to increase to €4.2bn a year in current money terms when the scheme is mature (plus overruns on administration costs) – yet this massive undertaking has been embarked on without a comprehensive cost-benefit analysis ever being completed.

“It’s quite incredible. We still have time to reconsider. The next government, of whatever hue, must recognise the folly of trying to implement such a massive undertaking without adequate planning.”

He added that “it must press the pause button” and ask the Economic and Social Research Institute to “complete a root-and-branch review”.

The Department of Social Protection was contacted for comment.