Jonathon Howard, head of corporate clients at wealth manager Courtiers, questions whether Personal Accounts are really necessary in a country with an already complex pension system.

Let me share a little secret with you. In three years’ time, the government is set to unleash a radical new pension scheme on the population. What’s more worrying is that, unless you are part of a decent work-based pension, you will automatically be enrolled into this new scheme.

Why do we need yet another state-run pension? Well, according to research, an estimated ten million adults are still failing to make any provision for their retirement, and the government believes that the main reasons for this are apathy and cost.

Now forgive my cynicism, but back in 2001 the government launched stakeholder pensions to tackle these exact problems. They were cheap and companies were forced to set up a scheme if they employed more than five people. Since these plans are still available, why the need for Personal Accounts?

There is no doubting that stakeholder pensions fell significantly short of their target.  Thousands of schemes currently lie empty and dormant, testament to the fact that people will do what they want to do, not what the government suggests they do. Apathy, it seems, is still in the driving seat.

So how do you solve the problem?

Simple – force people to join. All employees of any company, no matter how small, will be auto-enrolled into a Personal Account unless the company already auto-enrols them into a better work-based pension. Employees will be expected to pay four per cent of band earnings, with the employer paying three per cent and the government paying a further one per cent. Employees will have the right to opt out but employers must not encourage it, and re-enrolment will occur every few years. In theory, only the most tenacious will avoid membership forever.

Let’s think about the implications of all this. Every employer in the UK is subject to this scheme, even those that currently pay nothing towards their employee’s pension provision. Where will this additional three per cent employer contribution come from? Will your local pub put up the price of beer by three per cent? Will the landlord take a three per cent pay cut? Or will employees simply miss out on their next annual pay review? In all likelihood, the personal cost for many employees will actually be seven per cent.

There is also a fear that there will be a widespread levelling down of employer pension contributions. Now that the government has sanctioned three per cent as a reasonable contribution rate, will those employers currently paying more reassess their generosity? I suppose that question will depend to a large degree on the economic picture in 2012, but with many companies already desperate to cut costs, levelling down is of far greater concern than when the scheme was conceived.

I do accept that auto-enrolment will benefit some reluctant savers, but we must also remember that the average Personal Account pension scheme will provide retirees with an additional gross annual income of just £1,000. Furthermore, for an estimated 600,000 people, membership will have a devastating impact on their means-tested benefits.

Let’s hope that the government does some serious thinking between now and 2012. Britain already has the most complex pension system in the world, and the last thing we need is another ineffectual state pension to add to the pile.