The Government claims a central part of its strategy to promote simplicity, security and choice in UK pensions is in place after the Pensions Act received Royal Assent on Friday.
The Pensions Act will create a Pension Protection Fund (PPF) and the establishment of a Pensions Regulator to oversee the scheme.
The £400m PPF is intended to provide better protection for the accrued rights of staff with defined benefit occupational pension schemes in organisations that become insolvent.
Alongside the PPF, the Pensions Act contains the Financial Assistance Scheme (FAS), which is designed to help thousands of workers whose pension schemes wound up with insufficient funds and an insolvent employer.
Secretary of state for work and pensions, Alan Johnson, said: “People will no longer be left high and dry if their pension scheme gets into trouble.”
The Act also contains simplification measures designed to help people make informed choices about when and how to save by giving workers better access to quality information in the workplace, an online retirement planner, which allows individuals to see their retirement options in a matter of minutes, and, for the first time, an opportunity to defer state pensions and receive a lump sum.
Pensions minister Malcolm Wicks said: “We have always said that people face some tough choices about what they want in their retirement. This Act helps facilitate difficult choices – making the information easier to access, more straightforward and more relevant to them. Options such as deferring your state pension will mean people can make decisions that better suit them and their lifestyle.”