Deloitte research found 55 out of 415 Dutch funds reduced income in 2013 alone.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said larger pools of money could result in lower charges, but he echoed Ms Altmann’s warning of a likely lack of demand by saying this would schemes to “achieve a scale we doubt employer demand would support”.
Both Mr McPhail and Ms Altmann said enthusiasm for the model may be dampened by its similarities with previously popular ‘with-profits’ funds, which aimed to smooth payments to members over time and fell out of favour due to poor management and over-optimism.
Pensions minister Steve Webb said: “This coalition government has already made fundamental reforms to the pensions landscape. These new proposals are all about encouraging a flourishing and diverse private pensions market by providing greater choice to employers and savers.
“These reforms meet the needs and concerns of business while, at the same time, standing up for the interests of workers who are doing the right thing and saving for their retirement.
“With the backing of consumers and industry, this Bill will bring about new and realistic pension scheme options for those employers who want to do right by their staff.”