Back to the drawing board

Of course, today's politicians and financial company directors who benefit from management fees in the early years will be long gone before workers realise the inadequacy of their personal account pensions.

To make Personal Accounts work, we need radical reform of the state pension first, with an end to mass means-testing of pensioners. Even after all the recent reforms, nearly half of future pensioners will be on means-testing. This makes private pension saving unsuitable. Isas may be a better product for many - especially those who are young, with large debts or who have not yet bought their own home.

Personal Accounts will automatically enrol millions of workers, many of whom should not be in pensions at all, due to the interaction with state pension means testing. The idea of the state choosing investment products and forcing employers to contribute to workers' pensions that might merely replace benefits later is not sensible. We need to redesign state pensions so that there is a decent basic minimum provided by the state, perhaps from a later age, making pensions suitable for everyone.

The Personal Accounts reforms are an appealing idea in theory, but in practice they are a disaster in the making. Phasing them in more slowly does not improve the outcome, it will merely prolong and complicate the agony. Instead of delaying implementation, far better to address the problems that are already obvious in its design, before even more time and money are wasted on a policy that has the potential to make pension provision worse, rather than better in future.