Sweeping reforms to pensions were at the centre of this year’s Queen’s Speech.

In the final speech before the 2015 election, legislation on ‘collective’ workplace pension schemes was announced, with a Bill that will enable employees to pay into a collective pension fund shared with other workers that aims to cut costs and “pool risk” between members.

People will also no longer be forced to buy an annuity with their pension savings, and will be given more choice over how they access their pension.

A Childcare Payments Bill was also announced, which includes a new ‘Tax-Free Childcare’ scheme worth up to £2,000 per year for each child, to be introduced in autumn 2015. The scheme will repeal the existing Employer-Supported Childcare initiative, and has been extended to cover all children up to 12 years old. 

There will also be higher penalties in place on employers who fail to pay staff the National Minimum Wage, as well as a crackdown on abuse of zero hours contracts.

In a statement ahead of the speech, the Prime Minister and Deputy Prime Minister said it will be “unashamedly pro-work, pro-business and pro-aspiration” with “ground-breaking pensions reform” at its centre.

“The reforms we plan will be the biggest transformation in our pensions system since its inception, and will give people both freedom and security in retirement. By no longer forcing people to buy an annuity, we are giving them total control over the money they have put aside over their lifetime and greater financial security in their old age.

“At the same time we’re completing sweeping reforms to workplace pensions to give employees more certainty about their income in retirement. Taken together, this is a revolution that matches our previous reforms to education and welfare in giving people opportunities they were previously denied.”

However, Katja Hall, deputy director-general at the CBI warned that collective defined contribution schemes will not be for everybody.

“While they could mean better returns, less risk and lower funding requirements, savers need to understand that even in retirement their pots could decrease because there are no individual controls over how pensions are drawn down."

On zero hours contracts, Joe Tully, MD of de Poel,  said that updating and improving ways these contracts work will be an excellent way of getting people back into the jobs market at a low cost for employers.

“While they have allowed some businesses to employ the required staff on a flexible basis in order to keep overheads low, there are loop-holes that have allowed staff to be exploited; tied down to contracts that provide little opportunities to work.”

“It is not about total reform, it’s the finer details of these contracts that are being re-written: the removal of the exclusivity provisions will allow workers to look for the required hours and income elsewhere and staff will be employed with a minimum number of hours, guaranteeing a fixed level of income. These proposals will help to negotiate the balance between the employer’s and worker’s need for flexibility.”

Yet Mark Mitchell, CEO of Meridian Business Support, warned: "While we would like to see exclusivity on these contracts outlawed, we fear that this bill will introduce more red tape that will ultimately marginalise the thousands of people happily and successfully engaged on zero-hours contracts."