The new Personal Account pension scheme set to be launched in 2012 could be dead in the water unless it makes sense to subscribers.

An estimated seven million employees have no private pension plan and it is this sector that the government is trying to target.

Most of the workers it would affect, mainly those on incomes of £15,000 or below, would have to have the benefits of the scheme fully explained before committing any of their hard-earned money to it.

Des Hamilton, technical director for the Pensions Advisory Service (TPAS), said that problems regarding means tested payments meant that subscribers might only be getting benefits which they would be getting anyway on state means tested benefits.

"It's not a problem with the scheme… It's just an inevitable consequence of having means tested benefits," he said.

One solution, Mr Hamilton said, would be not to take any pension payments into account when working out means tested benefits but he conceded that this might be "very expensive" for the government.

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