The government is set to unveil details of its long-awaited Pensions Bill on Thursday.

It follows the publication of a much-criticised green paper in March last year.

The legislation is expected to include a new "safety net" designed to protect pensions from a company's bankruptcy.

Businesses would initially be charged a flat-rate levy to fund the new scheme, rather than through a premium scale based on the risk of it going bust, which will be based upon a cost for each member.

A second levy would consider an existing pension scheme's deficits and "one or more additional factors" if appropriate.

Responsibility for devising a risk-based system will be delegated to the board that will run the fund.

Employer concerns

However, such a move would go against advice from the Confederation of British Industry, which argued that a risk-based system would prevent financially sound companies from bearing a disproportionate cost of bailing out less stable businesses.

The Engineering Employers' Federation also voiced concerns over the reported proposals.

"This is deeply worrying," said head of pensions David Yeandle. "We need a risk-based approach to remove the moral hazard that would see weak companies with big pension liabilities deciding to go to the wall, with the cost met by stronger companies who are looking after their schemes.

""We are very worried that this could be moved into the 'too difficult' basket - that the scheme will start out flat-rate and remain so for a very long time. I would almost prefer that the government put the scheme off to get it right."