Scrap key pension benefits, says report

Workers would have no guarantee that their income in old age would keep pace with inflation under plans being considered by ministers to hand greater control of pensions to companies.

In a review yesterday, the Government's pensions adviser, Alan Pickering, suggested legal safeguards governing whether firms index-linked pensions and provided money for dependents should be scrapped. He said firms should be allowed to offer simpler schemes with less regulation.

Mr Pickering, a former chairman of the National Association of Pension Funds, said the new scheme could stop companies closing their defined benefit pension schemes that offer guaranteed pay-outs in old age.

But unions and charities for the elderly claimed the proposals in A Simpler Way to Better Pensions would leave many more pensioners in poverty. Roger Lyons, the general secretary of Amicus, condemned the report as a "sell-out of millions of workers".

Mr Lyons criticised Mr Pickering's proposal that the law should be relaxed over widows' and dependents' benefits. Mr Pickering said firms should be allowed to decide if they wanted to promise to pay pensions of deceased staff to dependents. He suggested companies could also make joining their pension scheme compulsory.

Age Concern said removing the requirement to link pensions with prices could have "a devastating effect" on many.

Susan Anderson, a CBI director, said: "Mr Pickering's proposals are a step in the right direction. They will cut red tape and contain costs, making it easier for employers to provide and maintain occupational pensions."