Personal Accounts: Conclusion: Outcome and next steps

114. Personal accounts are at the centre of our pension reform package. Combined with the proposed changes to the state pension system, we are in a position to make a lasting, sustainable set of reforms, supported by a strong evidence base and wide consensus across society.

115. Personal accounts will be delivered by a modern type of organisation: managed independently and for its members, though within a framework set by the Government; not delivered by the State, but by the private sector. Our goal is to set the framework for people to take responsibility for themselves: enabling millions of people to save for their retirement; making difficult choices easier and ensuring that there is a range of choice to suit everybody, whatever their level of income or financial understanding.

116. The reform package will lead to a significant shift in the pension savings culture in the UK. Our research indicates that we can expect:

potentially between 6and 10 million members of personal accounts;

£8billion a year in contributions, of which £4–£5 billion will be new saving;

a radical reduction in charges faced by pension savers leading to final pension funds that could be 25 per cent larger;

improved incentives to save; and

an invigorated and expanded pensions market.

117. The Pensions Commission warned that, without action, future generations of pensioners would be poorer than today’s. We are taking that action now by introducing these reforms. Automatic enrolment will help overcome inertia and short-termism. Personal accounts will lower charges and improve portability. Together with the minimum employer contribution, they will transform incentives to save for ordinary working families.

118. The Government has now set out its plans for reform of both private and State Pensions. The State Pension will become fairer and more generous, providing a solid platform on which people can save. Personal accounts will extend the benefits of work-based saving to those who have not so far had that opportunity. Together, these reforms amount to one of the most significant reforms of the welfare state since Beveridge. They are based on the State as an enabler, giving people control over their lives. To work, these reforms need the commitment not just of the Government but of all parts of society. To last, they need to command a consensus both now and during implementation. We will continue to work to deepen that consensus with all those with a stake in a success of these reforms.