The introduction of personal accounts will enable more people to benefit from investment returns in financial markets and to receive higher incomes in retirement. We expect approximately £4 billion-£5 billion of additional savings per year as a result of personal accounts.
The impact on financial markets of such a savings increase is likely to be limited. Funds under management in personal accounts are expected to be invested in a diversified portfolio and are expected to be small compared to existing financial markets. As a result, we would not expect the rates of return delivered by the financial markets to pensioners to be affected significantly by the introduction of personal accounts.