Employees enrolled in the government’s proposed new low-cost pension scheme will be banned from transferring their existing pension assets into the new personal accounts for at least eight years.

The pensions white paper on Tuesday will attempt to assuage industry concerns that the low-cost scheme, to come into effect in 2012, will suck in pension savings, hasten the demise of more generous company schemes and increase employer costs.

To keep management costs down, the government is understood to have opted for a personal accounts system that will offer a limited choice of funds but, initially at least, not branded products.

That will disappoint insurers, who have said the scheme should be run by competing providers.

But ministers will argue that the formation of personal accounts, into which employees with no pension will be enrolled automatically, could increase private pensions saving by £4bn-5bn a year by 2015.

The reforms will be presented as a business opportunity for fund managers and administrators, who will run the scheme under contract.

To reassure business about the cost of the reforms, compulsory employer contributions – either to personal accounts or to an existing company scheme – will be phased in during three years.

Companies could also benefit from a delay of three months or possibly longer before contributions must be made for new employees, thereby excluding many temporary workers.

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