The charges levied on their contributions, while high in some cases, will largely have been offset by the good stock market performance in the past five years - the average managed pension fund grew by 18.4 per cent a year.
But policy-holders will now face increasingly urgent requests from companies and financial advisers to increase their contributions.
Nick Bamford, pensions director of Weybourne Financial Services, in Surrey, said: 'The key issue for people is that if they think they will get a decent pension when they have paid in a tiny contribution over their working lives, they are in for a major disappointment.
'At the end of the day, fund performance, no matter how spectacular, will never make up for regularly saving as much as you can decently afford.'
The pressure for people to increase their contributions follows a study by Coopers & Lybrand that showed that 2.4 million personal pension holders earning less than pounds 10,000 a year may have lost money by contracting out of their state earnings-related pension schemes.
Up to 70 per cent of the six million personal pensions sold in Britain since 1988 are funded only by the Serps rebate. The current rebate is worth 4.8 per cent - 3 per cent from the employer's NI and 1.8 per cent from the employee's contribution. The over-30s get an extra 1 per cent. This is based on 'band' earnings, currently between pounds 56 and pounds 420 a week.
On an income of pounds 10,000 this amounted to about pounds 600 a year until last year, and about pounds 400 at present since the 2 cent incentive was reduced. Those who opt out of Serps lose their right to a state top-up pension.
As men and women age, it makes sense for them to contract back into Serps. But if no more is paid into their pension , the existing funds may be whittled away by charges over the years.
Gareth Marr, director of Moors Marr Bradley, financial advisers, said: 'Policy-holders should contact the adviser who sold them their pension in the first place and discuss the matter with him. They should also obtain an annual statement on their funds from the pension provider.
'They need to discuss whether they are better in or out of Serps, what the pension's management charges are and how they can be reduced. It is quite easy to do this.'
Many companies levied a percentage charge on whatever was paid in each year. This was preferable to a fixed monthly fee, which was more expensive for small annual deposits.
Mr Marr said if one company's charges were deemed too expensive a form could easily be obtained from the Department of Social Security that shifts funds and future Serps contributions from one pension provider to another.
Nigel Bruce, a pensions manager at Pearl, said: ''We have always sought to encourage people to pay something more than their Serps contributions into their pensions, because they stand to gain far more by doing so.'
He said his company's policy charges of pounds 31 a year are such that a person in a with-profits fund should be earning at least pounds 7,000 a year if the pension is based solely on the Serps rebate. On Pearl's unit-linked policies, tied more closely to equities, a charge of pounds 3.10 a month is levied. Minimum earnings should be pounds 10,000.
Prudential estimates that a Serps rebate-only pension scheme invested in its company would require an income of pounds 8,500 for it to deliver the same income at retirement as the state scheme.
The Pru levies a pounds 20 annual fee which is waived as soon as policy-holders make their own contributions.
Standard Life operates a monthly charge of pounds 2.95 on a personal pension plan, falling to pounds 1.50 if used solely to contract out of Serps.
Bill Robertson, products manager at Scottish Amicable, said his own company charged pounds 12 a year to people who simply paid Serps contributions into their funds.
He added: 'We have always tried to tell people that whatever the level of charges we make, it is far more important that their total contributions are higher.
'That is the only way they can protect their benefits at retirement.'Reuse content