Aegon says the Personal Accounts Delivery Authority must tell savers in personal accounts that charges could rise in the future or risk not treating customers fairly.
It says the running costs of personal accounts will be affected by differences between actual and assumed employer and employee behaviour.
Aegon says unknown factors, such as whether opt-out rates will match expectations, could mean that initial charging assumptions are over-optimistic.
If this leads to costs exceeding charges, Aegon believes the scheme rules should allow charges to rise to avoid the risk of calling for taxpayer subsidies.
It says there is a potential for a timing mismatch between charges received and costs incurred because Pada will have up-front costs which may only be recouped in the long term.
Aegon says undue focus on keeping charges low at the outset could build up financial pressures for the future, with late joiners facing higher charges.
Head of business regulation Steven Cameron says: “Giving Pada the power to increase charges if necessary will be a vital component. The risk of having to do this can be reduced by building margins into the initial charges.
“But it would go against the spirit of treating customers fairly if people are not told of this possibility before they are auto-enrolled into personal accounts. As we move towards implementation stage, the industry needs to work with Pada to get the best outcomes for all consumers.”