Government must rethink personal accounts

Pinsent Masons partner Robin Ellison – speaking at a debate on pension provision, hosted by Pointon York Group – said: "Private sector employers and employees who wish to have a defined benefit pension scheme are precluded from that by the regulator, but you do not solve one tragedy by creating another tragedy.

"Whoever is in charge in 2012 will face a real challenge over personal accounts."

Ellison said the government has failed to tackle the mechanics of the scheme.

He added: "How are they going to cope with the Lithuanian plumber who gets enrolled into personal accounts? I do not think they have focused on the mechanics of the thing."

Ellison claimed the estimated set-up costs of personal accounts stood at £11bn.

He said: "That is a lot of money if it is not going to work. Is the Personal Accounts Delivery Authority prepared to report back to government and say this is not doable? Does it have a plan B?"

Global economist Roger Nightingale said people in the UK need to accept they have to work longer or face poverty in old age.

He said: "It is obvious what we have to do – we have to reduce the number of retirees relative to the number of workers. Raising the retirement age is going

to happen.

"People will have to work for longer but these jobs are not going to materialise by magic when we want them. If we want these people to be employed we have to price them into work."

Nightingale added that older workers will have to be prepared to take lower pay to ensure they remain employed.