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Standard Life claims the decision to end talks with a cross-industry group, aimed at developing a quality test for existing workplace pension schemes, would have a detrimental impact on existing savings provision and potentially leave low to middle income earners worse off in retirement.

John Lawson, head of pensions policy at Standard Life, said: "Millions of low earners are set to lose out as a result of the government's failure to listen to concerns on this issue.

"The government has repeatedly claimed that it wants Personal Accounts to complement rather than compete with existing pension provision, but this appears to be nothing more than empty rhetoric.

"In fact, the opposite would appear to be true. The government appears to be hell-bent on destroying existing provision rather than protecting it."

The comments come after the Department of Work & Pensions (DWP) announcement at a private meeting earlier this week that it would not be progressing with the idea for a quality test put forward by a group comprising of the Association of British Insurers, National Association of Pension Funds and Confederation of British Industry.

Under that proposal, employers would have had to certify that the majority of their employees would be as well off, if not better off, under existing arrangements than they would be in the Personal Accounts scheme, enabling schemes to continue using their existing definitions of pensionable earnings.

Instead the government has opted to progress with a quality test developed by its own officials, which Standard Life said would effectively require pension schemes to adopt the same definition of pensionable earnings as the Personal Accounts scheme.

Lawson added: "We urge the government to re-think its position. Unless it is willing to do so the biggest losers will be the low paid, particularly women, who are the very people the government is supposedly trying to help."

However, a DWP spokesman denied that discussions had been closed.

He said: "We have not shut the door on further changes, and discussions are continuing with stakeholder groups - but some of the alternatives suggested to us thus far would undermine employees' minimum level of pension saving.

"It is not the method of calculation that counts – but the overall value of contributions. We propose to amend the Pensions Bill to clarify this, and to allow the value of contributions to be assessed over a period of up to a year to allow for workers with fluctuating wage packets.

"There is no reason for employers to make any changes as long as their existing arrangements result in contributions of at least equal value to those required by the Pensions Bill. Moving staff into personal accounts would not remove this obligation or make the calculation any simpler for employers – they would still have to ensure overall contributions were of sufficient value."