The government has unveiled new plans to safeguard employee pensions by making firms pay into a fund which will compensate staff if their employer goes bust.
The Pensions Bill includes several measures to ensure businesses do not abandon staff payment plans if they become insolvent, including the appointment of a pension regulator to combat fraud and to check that firms follow the new rules.
Companies that offer pension schemes will be required to pay into a special fund which will be made available to staff if their business goes to the wall.
The bill also stipulates that if a small firm is taken over by a larger company, employee pension funds will be taken on by the new owners.
Tax requirements on pensions will be simplified, with eight separate tax regimes replaced by a single system.
The government hopes the bill will tackle the UK’s pension crisis, which has seen thousands of workers miss out on their retirement funds after their companies became insolvent.
The Department of Work and Pensions (DWP), which is responsible for the bill, claimed that the new measures will make it easier for employers to provide pensions by cutting down on red tape.
Andrew Smith, work and pensions secretary, welcomed the new bill.
“Where companies with under-funded pensions have gone bust, workers have found themselves severely short-changed on the pension they were expecting.
“With the Pension Protection Fund, people in pension schemes can be much surer that they will get the pension they were promised,” he said.
The bill also contained proposals to encourage older workers to delay retirement. The government hopes to relieve pressure on pension plans and help combat the UK’s severe skills shortage by increasing the number of employees staying in work after 65.
