Legislation that would offer a safety net to members of company pension schemes whose employer goes bust was included in the Queen's Speech yesterday.

The Government plans to set up a Pension Protection Fund to ensure people who save into a company scheme do not lose their pension if their firm goes under.

It has previously said the scheme would be funded through a levy on companies offering final salary pensions and would pay out at least 90 per cent of a member's pension.

Other measures included in the Pensions Bill aim to encourage people to save more and make it easier for companies to offer occupational schemes.

The introduction of an online retirement planning service would help people estimate how much retirement income they would have, based on details of their state pension entitlement and any personal or occupational schemes they were members of, as well as providing options on how they could address any shortfall.

People would also be rewarded for putting off drawing their state pensions, receiving either an increase in their weekly pension for each year they deferred it or a one-off taxable sum.

It has previously been suggested that someone who put off claiming a full state pension for five years would be likely to receive a lump sum of about £30,000.

The Bill also includes a series of measures to reduce the cost and red tape for firms that offer pensions and make it easier for them to change their schemes.

The requirement for companies to increase occupational pensions in line with the Retail Price Index would be relaxed, rules on contracting out of the State Second Pension would also be simplified, removing the need for a Guaranteed Minimum Pension.

It would also be made easier for people to take occupational pension savings with them when they change jobs.

CBI Deputy Director General John Cridland said: "Pension scheme members should be protected against companies going bust but the current proposals for a pensions protection fund puts too much burden on business.

"Companies with sound schemes cannot be expected to bear the entire risk of bailing out those that fail."

Diane Gaston, of the National Consumer Council, said: "The plans only tinker at the edges of the growing pensions crisis.

"It is essential pension-saving incentives are simpler and fairer - along the lines of the Child Trust Fund. People also need help in navigating the saving and pensions maze, with an affordable, independent and local advice service."

Thursday November 27, 2003