A cross-party group of MPs has urged the Government to make it easier for businesses to adopt a Royal Mail-style deal for pensions schemes.

A report published by the work and pensions committee today said businesses needed to be able to access the new Collective Defined Contribution (CDC) pensions schemes in order to avoid costly payments to schemes in the future. A deal could “transform the pensions landscape”, it said.

Defined benefit pensions schemes have been in decline for a number of years as employers try to reduce their exposure to ongoing funding obligations. Some companies have been hit by huge pensions deficits as a result of paying into a scheme over many years, leading to some high profile collapses including BHS and Carillion.

As a result, a type of pension scheme known as individual defined contribution is growing fast, but they are unpopular among workers because they make individuals manage their own pots on retirement rather than guaranteeing a regular income.

The new CDC schemes, which are already used widely in Denmark and The Netherlands, only promise workers a target amount which it will pay out, meaning if a company’s financial position changes it is not left with huge bills. However, the scheme also provide a regular payout for retirees.