Personal Accounts

Britain is faced with increasing life expectancy and declining provision from work-based pension schemes. People are simply not saving enough, perhaps concerned about the cost of a pension, lured by property investments or more interested in living in the present.

The new Personal Accounts are due in 2012

Lack of trust

Which? research has shown that there is a fundamental lack of trust in the financial services industry after mis-selling scandals such as endowments.

There's also a lack of suitable low-cost products for people on low to medium incomes, and little access to general advice and information for consumers.

A new scheme

Which? has been campaigning since 2002 for a better retirement for all consumers. In 2012 the Government will introduce Personal Accounts into which those without a good company scheme will automatically be enrolled. 

Employers will contribute 3%, employees will pay in 4% of their salary and 1% tax relief will also be given. The scheme is aimed at low to medium income earners without access to a decent employer pension scheme or suitable low cost pensions product.

Which? support

Which? is fully supportive of Personal Accounts because it is a simple, low-cost scheme with a manageable choice of funds, run by an independent board people can trust.

We are also campaigning for a comprehensive system of generic financial advice for all to enable consumers to better inform themselves and make decisions that are right for their personal situations. Find out more about our financial advice campaign.

Pensions Act

The Pensions Act received Royal Assent in July 2007. It made provision for the establishment of a Delivery Authority for Personal Accounts.

Which? wants to ensure that consumers are represented on the Personal Accounts Board and are pleased the government have announced there will be a Members’ Panel to ensure that consumers' views on Personal Accounts are heard. 

We will continue to campaign on all aspects of Personal Accounts in the second Pensions Bill, expected to receive Royal Assent in 2008.

What should you do?

Personal Accounts will be introduced in 2012. People will be able to put an initial sum of up to £10,000 into their Personal Account.

Until then, the best option will depend on your individual circumstances. Which? can't give you financial advice, but if you have access to a good pension scheme through your employer then you should consider taking up this option. If you don't have access to such a scheme, an ISA or a Stakeholder Pension may be a good place to save. Find out more about your pension options.