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Barber: No alternative to personal accounts

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TUC general secretary Brendan Barber has affirmed the TUCs stance that personal accounts will form an essential part of the pensions settlement and auto-enrolment cannot take place without them.

Barber stated auto-enrolment cannot work without there being one organisation obliged to provide a pension to every employee and he claimed there must be a not-for-profit scheme designed to keep costs down and set standards private-sector providers need to follow.

He also warned the European Union might not exempt auto-enrolment in private pensions from rules regarding employee inertia without the guarantee that personal accounts would set consumer-friendly standards.

He added: "Abandoning personal accounts would at best be a wholesale capitulation to pensions industry vested interests. At worst it would destabilise the whole system, leaving the country without a comprehensive pensions system."

According to research among industry experts by employee benefits provider B&CE Benefit Schemes, auto-enrolment into pension schemes and compulsory employer contributions for those that do not opt out is the best thing to come out of the pensions bill.

Affordability is the greatest barrier to pensions saving in the UK with most people not contributing to a pensions claiming it is because they do not have enough money.

John Jory, deputy chief executive of B&CE Benefit Schemes, said: "Low to moderate earners do not look for reasons to save but instead find excuses not to save.

"As an industry we need to ensure those on low incomes who make the effort to put money by for their retirement are demonstrably better off than those who do not."