The BBC's Carolyn Quinn: "More carrot than stick"

Details of its plans will be spelled out on Tuesday, when the consultation document, or Green Paper, on pensions is published.

A department source confirmed that the government had stepped back from making everybody take out a compulsory pension.

The idea was favoured by Frank Field, who resigned as welfare reform minister in the summer reshuffle.

But the government fears it could be seen as a tax by the back door.

Instead, Social Security Secretary Alistair Darling will unveil ideas to give special pension help to the poorest workers, and incentives to save for those earning between �10,000 and �20,000 a year.

They could include reductions in National Insurance payments.

Alistair Darling: Stepping back from compulsory second pensions

A department spokesman said: "The idea of compulsion isn't going to happen.

"The main reason for that is that it doesn't work. You can't make those on low incomes earning �5,000, �6,000 or �7,000 save, because even if they saved everything they earned, that wouldn't give them a viable second pension.

"And compulsion isn't the answer for people on high earnings, those with good occupational schemes, good personal pensions, or with successful businesses.

"Making them take out another pension won't solve the problem. It will just force them to take out investments which may not be suitable for them."

Political Correspondent Carolyn Quinn: Compulsory second pension could be seen as tax by back door

Mr Darling told BBC1's On the Record: "I believe that what we will have is the most radical reform the pension structure has seen for a quarter of a century.

"It will set us in good stead for the next 50 years, because what we will do is provide security for those on low incomes and, at the same time, ensure that people who can save both have the opportunity to do so and do actually increase the amount they are saving."

One in three old people will be means-tested for pensions

"No responsible government can tolerate a situation where it knows that at least a third of the present population are going to need benefit on retirement."

Asked about compulsory second pensions, he said: "People earning under about �9,000 a year would not, even if they saved every free penny they had, get the sort of pension that would lift them to the level that they would like to and we will be making proposals to remedy that."

Mr Darling added that people on low incomes, or just above the �9,000 level, had a "limit" on how much they could save.

"If you have somebody perhaps with young children, perhaps on a low income with a mortgage, any government has got to take a commonsense view as to how much these people can reasonably pay."

Mr Darling is expected to warn that on current trends, one in three people retiring in 30 years will spend their old age on means-tested benefits.

The Green Paper is likely to include proposals to:

• Get the state to top up pensions for low earners to help them have adequate retirement incomes - possibly through giving them credits towards pensions, rather than cash

• Introduce incentives for those earning between �10,000 and �20,000 a year who are not believed to be saving enough for retirement at the moment, to encourage them to save

• A particular target will be people whose current contributions to Serps will not be enough to give them decent incomes when they retire

• For carers, such as adults looking after children, elderly, infirm or sick relatives at home, who cannot during those periods afford to contribute to a second pension, there will be a new pension payment, worth about �1 week for each qualifying year

  For example, someone caring for a person for 50 years would get about �50 a week on top of basic state pension.

• Plans for the much-vaunted stakeholder pension will also be unveiled

  Particular groups of people whose members might not have access to good second pensions, such as trade unions, local authorities and trade bodies, could seek government approval to run a pension scheme for members in conjunction with a financial institution.

• Mr Darling is expected to suggest that people should be allowed to opt out of occupational pension schemes only if they are going to something as good or better - to avoid the state having to pick up the bill in benefits for them if they end up worse-off as a result of their decision