Better rights but at what cost?

The stark warning follows the announcement by the government that it is to take urgent action to prevent employers from winding up employee pension schemes.

In addition the government plans to force firms to pay to insure their workers pension scheme, has also come under fire.

But unions say government action is overdue and welcomed the extension of workers rights.

Death knell

The new rules on wind-ups mean that solvent firms which choose to close a scheme they will have to buy an annuity, income for life, for retired scheme members.

UK PENSIONS IN CRISIS Key pension facts and figures at a glance In pictures

Firms will have to pay scheme members below retirement age money which they can invest elsewhere.

In the past firms were allowed to wind up schemes even if assets outweighed liabilities, leaving some workers with little to show for their savings.

The government are right to stop the practice of solvent companies drastically cutting workers pensions Brendan Barber TUC General Secretary

Secretary of State for Work and Pensions Andrew Smith told the House of Commons that he would ensure that employers delivered on their pension promises.

But Stephen Alanbritis, spokesman for the Federation of Small Businesses, told BBC News Online that the move to protect employees in the event of wind-ups could sound the death knell for some businesses.

"Sometimes winding up a pension scheme is the only way of keeping a business alive, take that away and we could see firms go bust."

Union call

As for plans to make pension schemes contribute to an insurance which would guarantee benefits to members if they go under, Simon Martin, Head of Research at Aon Consulting condemned the government for having set levels of compensation at a "unrealistic and excessively high" level.

In response, Brendan Barber TUC General Secretary told BBC News Online that the move to a compulsory pension insurance was overdue.

"The TUC has been calling for this for the last decade as it functions effectively in a number of other countries."

Mr Barber welcomed the move to protect workers in the event of their pension scheme being wound up.

"The government are right to stop the practice of solvent companies drastically cutting workers pensions. "

"Employees who pay into pensions for twenty or thirty years finally know that their employer has to meet their pensions promise," he said.