Government responses to submissions made on the white paper on personal accounts have been welcomed by a number of industry parties.

Yesterday the government announced proposals for a yearly limit on personal account contributions, set at £3,600 with indexation up to 2012 - a significant fall from the £5,000 limit formerly suggested.

Ian Naismith, head of pensions marketing development at Scottish Widows, commented: "Personal accounts can be a major step forward in improving pension provision for those who currently lose out.

"We are delighted that the government has responded to our concerns about the possibility that there could have been a serious adverse effect on good existing employer provision."

Meanwhile, the Association of British Insurers joined the voices welcoming the cap but warned that further work would be required on the details.

The ABI said that the capping figure would ensure that the scheme remains focused on its target market of low to middle-income earners.