GOVERNMENT proposals to tackle the pensions funding crisis were attacked last night for not doing enough to rescue Britain's elderly from poverty.

In its long-awaited Green Paper, the Government announced a raft of measures including scrapping compulsory retirement ages and ruling out raising the state pension age.

Under the proposals, people will be able to work and draw a pension from the same firm, and staff will be rewarded with lump sums for deferring their pensions until they are 70.

Work and Pensions Secretary Andrew Smith admitted that about three million people were currently not saving enough towards their retirement. But the Green Paper was attacked by unions for being "ill-thought out".

Kevin Curran, regional secretary of the GMB Northern region, said: "I acknowledge that people should have the choice to carry on working after the age of 65, but this has to be through choice, not because of financial hardship.

"These proposals are ill-thought out, and could have a negative impact on unemployment, particularly for young people if large numbers of older workers are forced, because of low pensions, to stay on after 65."

The Government also suggested raising the normal pension age for all new public sector workers from 60 to 65. Dave Prentis, general secretary of Unison, said: "Raising the retirement age for public sector workers to 65 is irrelevant, as most workers are kicked out even before they reach 60 because of ill health, out-sourcing and redundancy.

"If public sector workers are unable to claim their pensions until they are 65, these proposals will simply force them into poverty for longer."

Kevin Rowan, regional secretary of the Northern TUC, said: "It's a step in the right direction but it hasn't gone anywhere near as far as we wanted."

The Green Paper also proposed reducing red-tape to make it easier for companies to set up and run occupational schemes, forcing employers to consult staff before changing schemes, and allowing them to make membership of their pension compulsory.

Protection for workers' rights was outlined when occupational schemes are wound up, particularly the "Gold Standard" final salary schemes which many companies are abolishing.

The Government said it would look at a fairer way of sharing assets when a scheme closed.

But Steve Rankin, regional director of the Confederation of British Industry, said many employers were working hard at keeping final salary schemes open, despite criticism.

"The cause of the problems has been a decline in stock markets and the removal of this Government of tax incentives," he said.

"We have argued for a transparent debate on pensions and this Green Paper has initiated that."

The Government is proposing to replace the existing eight tax regimes for pensions with one, which will dramatically simplify the pensions system and encourage more people to cut through the industry jargon and start saving.

People would also be able to put up to £1.4m in a lifetime, or £200,000 a year, into a pension and still get tax relief.

An independent pensions commission will be set up to look at whether or not to force people to pay into pension schemes.

David Abrahams, North-East based director of Campaign Against Pensioners' Poverty, applauded the scrapping of the retirement age bringing a "flexible decade of retirement".

But Mervyn Kohler, of Help the Aged, said: "We are bitterly disappointed with the Green Paper.

"This was a once in a generation chance to end poverty in retirement and the Secretary of State has failed to rise to the challenge.