The system of personal accounts outlined in the pensions white paper on 12 December 2006, does not go far enough to stop employers levelling down existing contribution levels to the proposed minimum.
Although good schemes will be awarded with a quality mark, there are concerns that not enough is being done to incentivise employers offering higher contribution levels to continue to do so rather than abandoning their current system to save money by reducing their contributions to the minimum level.
From 2012, employees must contribute a minimum of 4%, employers 3% and a further 1% will be paid by the government.
Andrew Tully, marketing technical manager at Standard Life said: "Employers dropping contributions to bench level is still a big worry for us, and we feel that the government could be doing more to encourage employers to maintain levels."
He also had concerns around how the system will be administered by private companies. "The only concern here is that you have no choice over who administers your scheme, and if your administration company is no good, then tough because you won't have a choice," added Tully.
Under the terms included in the white paper, employees will also be unable to transfer funds in or out of a personal account until 2020.
†