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'Collective pensions' set to be unveiled in Queen's Speech 'Collective pensions' set to be unveiled in Queen's Speech
(35 minutes later)
The government is expected to unveil plans to allow pension providers in the UK to pool investments into shared funds for the first time. The government is expected to unveil plans to allow workers to contribute to Dutch-style collective pensions, which it says could boost income for members.
Under the changes - set to be unveiled in this week's Queen's Speech - workers would be able to pay into Dutch-style "collective pensions". It is understood the move will feature in a Pensions Bill to be announced in the Queen's Speech on Wednesday.
Supporters say it would boost pension payments for many, but critics say the returns are not certain. Supporters argue the shared funds are a good investment as they are less vulnerable to stock market variations than individual workplace pensions.
Pensions minister Steve Webb said the move would give people "better value".Pensions minister Steve Webb said the move would give people "better value".
Critics say the returns from collective pensions are not certain.
Under the changes, which could be introduced by 2016, workers would be able to pay into funds shared with potentially thousands of other members.Under the changes, which could be introduced by 2016, workers would be able to pay into funds shared with potentially thousands of other members.
BBC political correspondent Ross Hawkins said sources had suggested a pensions bill expected to be announced in the Queen's Speech would allow the schemes to be used in the UK. BBC political correspondent Ross Hawkins said there was "a growing political consensus behind the idea".
He added there was "a growing political consensus behind the idea".
Supporters of the schemes say they provide a better investment than individual workplace pensions because they are less vulnerable to variations in the stock markets.
The NetherlandsThe Netherlands
Pensions minister Mr Webb told The Sunday Telegraph that the key advantage was "pooling risk" of investments performing worse than expected across large numbers of people of different ages.Pensions minister Mr Webb told The Sunday Telegraph that the key advantage was "pooling risk" of investments performing worse than expected across large numbers of people of different ages.
"It gives people greater certainty and probably better value," he said."It gives people greater certainty and probably better value," he said.
"There are some quite strong claims made for how much better it is. People say you will get a 30% bigger pension."There are some quite strong claims made for how much better it is. People say you will get a 30% bigger pension.
"You might, you might not, but clearly it is pretty unambiguous that you will get a more certain outcome and potentially a better one.""You might, you might not, but clearly it is pretty unambiguous that you will get a more certain outcome and potentially a better one."
But critics of the model have warned that, unlike a fixed annuity, pensioners only have a target for what they will receive in retirement - rather than a guarantee.But critics of the model have warned that, unlike a fixed annuity, pensioners only have a target for what they will receive in retirement - rather than a guarantee.
If the collective fund's investments fail to generate the predicted profits, pensioners could see their incomes fall in some cases.If the collective fund's investments fail to generate the predicted profits, pensioners could see their incomes fall in some cases.
The plan is based on schemes which are already operating in the Netherlands and Scandinavia.The plan is based on schemes which are already operating in the Netherlands and Scandinavia.
However, Dutch politician parties have recently called for collective pensions to be scrapped in favour of British-style individual pensions.However, Dutch politician parties have recently called for collective pensions to be scrapped in favour of British-style individual pensions.
The Queen's Speech, to be delivered on Wednesday, will set out the government's final legislative programme before the 2015 general election. The Queen's Speech will set out the government's final legislative programme before the 2015 general election.
The government has already revealed plans to overhaul the pensions system, with Chancellor George Osborne pledging in his March Budget to give people more control over the way they use their pensions.The government has already revealed plans to overhaul the pensions system, with Chancellor George Osborne pledging in his March Budget to give people more control over the way they use their pensions.