UK - The government has formally unveiled its proposals for "simple but radical" personal pension accounts - envisaging an eventual pool of up to £150bn (€223bn) to be managed by fund managers.

"It is estimated that personal accounts will increase the level of private pension savings by an estimated £8bn a year, of which £4-5bn will be new saving," the government said in a White Paper.

"Fund managers will compete to invest the £150bn which is expected to accumulate in personal accounts in the long term."

"To run the pension funds at low cost implies that the choice of funds available could be limited to index tracker funds and certain forms of balanced funds," said Stuart McLaren, investment management director at Deloitte.

"While the industry will not be earning the level of fees achieved in more actively managed funds, the potential £8bn per annum of new assets under management for the industry could mean significant economies of scale.

"The scale of money that will be under the control of the new scheme suggests important assurances must be sought as to the robustness of investment manager selection and monitoring and to the appropriateness of the available investment strategies for employees."          

The government's proposals, which feature auto-enrolment and a central delivery authority inspired by Sweden's PPM, follow the Pensions Commission's recommendations and will affect up to 10m people.

The accounts would have a guaranteed employer contribution of at least 3% would "kick-start" a new savings culture, the government said.

Pensions secretary John Hutton said: "From 2012, employers will automatically enrol their employees into personal accounts or into their own existing occupational pension scheme, as long at it meets the specified minimum standards.

"This simple but radical step will affect around 10m employees in Britain, and will be vital in overcoming the barriers that prevent many people from making the decision to save."

The government envisages low charges of around 0.3% of funds under management.

There will be no transfers into or out of personal accounts from or to existing pension schemes. And there will be an annual limit of £10,000 to restrict the level of contributions an individual can put into their account.

One aspect would be a default fund, likely investing in a wide range of assets with a "degree of life styling" to be designed by the delivery authority.