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Confirmation from the European Commission states that employers will be exempt from automatically enrolling employees into the personal accounts scheme if they provide an auto-enrolment company pension scheme that is at least as good as the proposed personal accounts.

Before the announcement today (16 May), it had been feared that employers would have had to shut down more generous, existing group personal pensions and replace them with the lower minimum contribution required by the proposed personal accounts scheme.

It also means employers will not have to make extensive changes to their existing pension schemes to comply with the Pensions Act.

The move has so far been well received by the pensions industry.

National Association of Pensions Funds (NAPF) chief executive Joanne Segars said: "This is welcome news for both employers and the pensions industry as a whole. It should materially help the introduction of auto-enrolment as proposed in the government’s 2012 pension reforms.

"This issue had been the elephant in the room for far too long and now it has been resolved, we can move forward."

Friends Provident also said that although a statement was still awaited from the Department of Work and Pensions (DWP) it represented a common sense move for the industry.

Jeremy Ward, head of pensions marketing at Friends Provident, said: "Group personal pensions (GPPs) account for a significant share of the UK pensions market.

"Removing this uncertainty means that they will continue to be good schemes when personal accounts are introduced and should remove the threat of mass rearrangements of pensions at that time."

He added: "Providers, advisers and individuals can now get on with pension planning without this hanging over them knowing that the market for GPPs will thrive beyond 2012."