Pre-Budget Report sparks call for personal account pensions to be ditched

Pensions experts have called for the abolition of the government’s flagship personal accounts scheme in the wake of the Pre-Budget Report.

Chancellor Alistair Darling announced a scheme that will effectively allow up to eight million people to save money at an interest rate of at least 50%, as the government will add 50p to every £1 people on modest incomes deposit in a Saving Gateway account.

But pensions leaders said the scheme made the forthcoming personal accounts system unnecessary.

They said the auto-enrol workplace pension scheme should be abandoned immediately to stop employers wasting time and money preparing for its arrival in 2012.

Geoffrey Pointon, chairman of pension services firm Pointon York Group, said: “When the chancellor announced the Saving Gateway scheme, that completely undermined personal accounts. Where is the joined-up thinking?”

Ros Altmann, independent pensions adviser, said personal accounts were not the best way to help people save for their retirements. “The personal accounts system will make pension provision worse rather than better. It should be abandoned,” she added.

Darling included the Saving Gateway scheme in the Pre-Budget Report to encourage those on modest incomes to save for the future.

He told Parliament: “The Saving Gateway will be widely available through a range of banks, building societies and credit unions and, I can tell the House, the Post Office.”