The growing shift to money purchase pensions, which the government's new stakeholder pension may well accelerate, risks leaving many more people with spectactularly low incomes if ill-health stops them working, reports the Financial Times.

Money purchase pensions leave individuals only with the fund they have saved, and few employees have permanent health insurance that provides income when people cannot work, the Government Actuary has warned. State invalidity benefit provides only £3,500 a year to those without dependants. It has been made progressively less generous, with tougher eligibility rules. Yet fewer than one million of the 13m people who are outside a final salary scheme have permanent health insurance.