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I will be happy to put my money into personal accounts if they can guarantee me an annualised return of 5.1 per cent above inflation. Sadly, even such ambitiously high performance figures will not be enough to make personal accounts an appealing prospect for many low or average-earners with 20 years or less to retirement.

The Department for Work and Pensions’ report on means-testing was never going to be able to demonstrate fantastic returns for savers because of the intractable nature of the problem it set out to investigate. Any muted successes it can claim need to be taken with caveats.

The first caveat should relate to the generous investment return. With many equity funds in negative territory over 10 years, the notion of equities as automatic vehicle of choice for the long-term saver is no longer as concrete as it once was. There is a far greater chance that equities will not achieve an annualised return of 5.1 per cent than that they will, so why not say so?

I spent an afternoon with two pension providers showing me their consumer-facing stochastic modelling tools. These give pension savers a wide range of outcomes, which is surely a more accurate way of looking at long-term savings. If such an approach had been used, then doubtless a figure considerably higher than 5 per cent of the population would be shown to have a significant risk of not getting back a sum equal to contributions. Add in the risk that annuity rates may be worse than they are today and the proportion could rise further.

But the proportion of losers will be greater still when you take into account the pay rises these workers will not get as bosses are forced to give them 3 per cent of salary in a pension for the first time. These are not the “good employers” who feel a paternalistic duty towards staff. These are companies which have chosen to get away with the minimum when it comes to remuneration packages. Employers will turn the argument that “pensions are deferred pay” against employees when it comes to pay negotiations in 2012 and afterwards.

Another of the report conclusions puts a positive spin on what the public would have assumed as patently obvious. “Virtually everybody modelled – over 99 per cent – is better off in retirement by saving,” says the report. That almost nobody will be worse off by saving is not much of a boast.

Probably the best line of argument to come out of the report, from the DWP’s point of view, is the conclusion that the large majority of savers will get back more than twice what they put in. This sounds good but needs to be read in conjunction with the DWP’s written answer to a question posed by Baroness Hollis last summer. Then, the DWP stated that someone on £10,000 a year would be only £2 a week better off in retirement after spending two decades paying into personal accounts.

Even somebody on £25,000 a year, more than the average UK wage of £23,700, will only increase their income in retirement from 30 to 31 per cent of salary after 10 years in personal accounts, according to the DWP’s written answer.

These figures do not contradict the recent DWP report, they just describe the situation from different perspectives. I think I know which story the general public will find easiest to understand.

John Greenwood is editor of Corporate AdviserMoney Marketing

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In 35 years in the City, I have been blessed by opportunity, wonderful mentors and friends – and being in the right place at the right time.

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