The government has set out legislation on collective pensions in the new Private Pensions Bill.
The purpose of the new legislation, which was confirmed in the Queen’s Speech on 4 June, is to enable employers to develop shared risk, or defined ambition, schemes that offer more certain outcomes for employees, while still keeping costs under control.
The legislation, which goes before Parliament on Thursday 26 June, will also allow the development of new collective pension arrangements based on risk-pooling models.
These have been run successfully in other countries, including the Netherlands, Sweden and Denmark.
The government has also published the responses to its consultation, Reshaping workplace pensions for future generations, which showed a broad consensus of backing for collective pensions from business, trades unions and individuals.
The response document also confirms that the government has decided not to pursue measures to allow reform of existing defined benefit schemes, after the consultation showed concern about the potential impact on current savers and pensioners, as well as a lack of interest from employers in such an option.
Steve Webb (pictured), pensions minister, said: “This Coalition government has already made fundamental reforms to the pensions landscape.
“These new proposals are all about encouraging a flourishing and diverse private pensions market by providing greater choice to employers and savers.
“These reforms meet the needs and concerns of business while, at the same time, standing up for the interests of workers who are doing the right thing and saving for their retirement.
“With the backing of consumers and industry, this bill will bring about new and realistic pension scheme options for employers that want to do right by their staff.”