Government plan 'to boost pensions'

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The Pensions Policy Institute said the accounts could lead to an extra nine million people saving into a pension, with additional contributions of £10 billion a year being made.

But the group said the impact of the new accounts would depend on how both companies and workers reacted when the reforms were introduced.

From 2012 anyone who is not already the member of a company pension scheme will be automatically enrolled into Personal Accounts, although they will still be able to opt out.

Individuals will contribute 4% of their pay, with companies paying in 3% and the Government contributing 1%. The PPI said the UK would be only the second country in the world after New Zealand to introduce a national system of auto-enrolment, and it was difficult to predict how many people would want to opt out of the scheme.

But it said it was likely that at least four million people, and possibly as many as nine million people, who had not previously been saving in a work-based pension scheme would begin doing so when the reforms were introduced.

The group also said that while there was likely to be a substantial increase in the number of people saving, any increase in the total amount being saved in private pensions would depend on how employers with existing schemes responded to the extra costs of having to automatically enrol workers.

Some employers have warned that they will close their existing schemes and simply offer staff low-cost Personal Accounts when the reforms come in, while there are also concerns that companies will reduce their contributions to staff pensions to 3% in line with the accounts.

The PPI said if employers acted in line with a survey on their likely responses, the reforms could increase annual pension contributions by around £10 billion in 2012, but it added that the figure may only be around £2.5 billion higher by 2050 than the level that would have been reached without reform.

Niki Cleal, director of the PPI, said: "Given the significant impact that employer and employee behaviour will have on the outcome of the Government's private pension reforms, it is important to collect further evidence on their likely responses."