A scheme to protect pension schemes when firms go to the wall forms the centrepiece of the government's bid to halt the present crisis.

The Department for Work and Pensions will highlight the fund as part of a series of measures aimed at rebuilding confidence in the pensions industry.

The voluntary scheme was part of several pensions initiatives contained in the Queen's Speech.

"Legislation will be introduced to encourage both employers to provide good quality pensions and individuals to save more effectively for their retirement," MPs and peers were told.

"A pension protection fund will be set up to protect employees and pensioners if companies become insolvent."

The new legislation will also establish a pensions regulator to target fraud and maladministration.

The department pledged that the legislation would also cut red tape for employers.

The bill will also introduce an online retirement planning service detailing state, private and occupational schemes.

And mandatory retirement ages will come to an end with people allowed to draw their state pension later if they want to.

"They would be able to choose between an increase in the weekly pension for each year of deferral or a one-off taxable sum on retirement," said the department.

There will also be more protection of pension rights when a business is taken over - a major issue for public sector workers who are contracted out to the private sector.

There was no mention of the £1.4 million cap on pension pots which has caused anger among some in the City.

Firms will also get more freedom to run a single pension scheme as long as they "maintain the value of the promise they made to workers".

Bosses said the government could not be allowed to off-load responsibility.

"Employers are not the villains of the pensions piece. They are committed to pensions and deserve credit for the huge sums many are piling into schemes but rising costs are forcing some to scale back what they can provide," said CBI deputy director general John Cridland."Pension scheme members should be protected against companies going bust but the current proposals for a pension fund put too much of the burden on business. Companies with sound schemes cannot be expected to bear the entire risk of baling out those that fail.

"Government and employees must play their part."

The Liberal Democrats warned the plans offered a false hope to workers.

"Workers need confidence that any Pension Protection Fund won't go bankrupt when company schemes fold," said the party's pensions spokesman, Steve Webb.

"The government's Pension Protection Fund only promises to secure pension schemes from 2005.

"Compensation must be provided for those who are and will be affected before then."

Pensioner campaigners echoed his comments with a demand for help for those currently experiencing difficulties.

"Proposals in the bill only amount to minor surgery of occupational pensions when we really need the government to perform a major operation on the whole system," said Gordon Lishman, Age Concern's director general.

"To really improve the health of our pensions, the government must examine the bigger picture, turn its back on means-testing and increase the basic state pension to at least £100 a week.''

A National Association of Pension Funds spokesman said: "We welcome the inclusion of the Pension Protection Fund in the Queen's Speech as a way of perhaps restoring confidence in occupational pensions among the general public.

"However we do have concerns about who is going to pay for it and how its going to be run. We don't want to see successful pension schemes subsidise failed ones.''