Changes to proposed new pensions laws have been met with widespread criticism.

The government was warned on Thursday that its Pensions Bill will fail to tackle the real issues facing the country.

The criticism followed the publication of legislation which included a new insurance fund to protect workers when their firm goes bust.

Critics say that the new fund will not offer the safeguards initially thought.

Industry condemnation

The pensions industry led the condemnation, arguing a complex system would remain in place.

"Is there anything in today's bill to simplify our archaic state pension system? Is there anything to encourage firms to offer decent pensions to their employees, or to keep existing schemes open?" said Terry Faulkner of the National Association of Pension Funds.

"Are there new incentives to encourage people to save? Is there any real long-term vision, or a clear pension strategy to achieve that vision? Regrettably the answer to all these questions is no."

Campaigners

Help the Aged warned reforms to the state pension system have been ignored by ministers despite it being the biggest issue for many of the poorest elderly people.

"While state provision remains mired in the complexities and inefficiencies of means-testing, the chances of rekindling enthusiasm for second tier pensions are slim," said Mervyn Kohler, head of public affairs.

The overhaul will also fail to help 60,000 people who have seen their funds wiped out.

Businesses also expressed reservations about the way the protection fund will work.

"We will be in the unacceptable position of well-managed funds with sufficient resources effectively underwriting other schemes," Richard Greenhalgh of the CBI's pensions strategy group said.

Long-term reform

Former pensions minister Frank Field said the government legislation would not allow for long-term reform.

"Nor does it offer justice to those tens of thousands of company pension scheme members who were compelled by law to join their scheme but now find they have lost all or a major part of their pension promise," he said.

The Liberal Democrats claimed the bill was half-baked and would not resolve the major issues facing the government.

"The government has buried its head in the sand," said the party's pensions spokesman Steve Webb.

"The pension protection fund is an insurance scheme not based on risk. It's like asking a careful driver to pay the same as a boy racer. There is nothing in these proposals to help the tens of thousands who have already lost all or part of their promised company pension. The government has a moral duty to compensate them."

He also questioned whether offering an option on extending retirement dates really was a good deal.

"These proposals are designed to offer workers a sweetener to work longer. When workers read the small print and see there isn't really much on offer they will be left with a bitter pill to swallow," said Webb.

Defence

The government had defended its new plans arguing millions of workers would get more protection.

The protection fund, paid for by employers, will guarantee that employees will get compensation if their scheme is closed.

The government has acted following the closure of dozens of schemes that have seen employees left with reduced pensions or some losing the cash they have put into schemes.

Regulator

Other plans revealed by pensions secretary Andrew Smith include a new pensions regulator with tougher powers to halt fraud.

As announced in the Queen's Speech, the bill will also offer people nearing retirement age incentives to continue working.

And in a bid to cut through the myriad of complex information, a new online service will be set up to offer pensions advice on the value of people's state pensions and private plans.

Smith said workers had to be protected from losing their main source of income in old age.

"It is a form of insurance really which will ensure that the 10 million or more members of occupational pension schemes will be able to know that they will get their pension when they retire even if their company goes bust," he said.

"However, the fund will not compensate workers who have already lost out.

"Like any insurance policy you can't really make it retrospective to cover people before it came in."

Support

Union leaders gave their support to the bill but warned a system of compulsory contributions - which have been rejected by ministers - is the only way to resolve the bigger problems.

The TUC also called for compensation for workers deprived of savings by the collapse of companies such as ASW in South Wales.

"Radical action, including compulsion, is needed to solve Britain's growing pensions crisis, but that will wait until the Pensions Commission has completed its work," said general secretary Brendan Barber.

"Collective insurance is the sensible way to protect pensions.

"However those employees who have already lost out should not be forgotten.

"Many employees of companies such as ASW were contractually required to join their occupational pension and were made a specific pensions promise by their scheme that has now been broken. They should be compensated."