The Government is pressing ahead with plans to grant far-reaching powers to the Pensions Regulator in a move that critics say will jeopardise the future of a raft of final salary schemes.

Mike O'Brien, the Pensions Reform Minister, will tell an insurance industry summit tomorrow that the Government will table an amendment to the forthcoming Pensions Bill that will mean the regulator can force companies to top up their schemes.

The move is designed to protect the interests of scheme members when their employers embark on an action that might be deemed damaging to their security.

It was seen as a direct response to the burgeoning growth of the pensions buyout market, where companies offload the liabilities of their scheme to a third party, not always a specialist insurer.

"In a fast changing world people need to have confidence that their money is safe. We must be careful not to inadvertently sacrifice hard won trust in pensions for the sake of a new market solution," Mr O'Brien will say on Wednesday.

"It has been prompted by concerns that some emerging alternatives to pension buyout may reduce the traditional security provided by an employer without putting adequate capital in place to reduce that security."

Granting the extra powers was seen in part as a response to Pension Corporation, the specialist investment group that had a run-in with the regulator over its acquisition of Telent, the rump of the former Marconi, and its pension fund.

Mr O'Brien later denied this and has stressed the credibility and financial strength of Pension Corporation, run by Edi Truell, the former chairman of Duke Street Capital, the private equity firm.

Sources stressed that relations between the two organisations are now strong.

The Government was also forced to respond to howls of protest at the planned changes by saying it was not trying to grant the regulator "carte blanche" to intervene in company policy.

Some critics had said that companies issuing bonds might be forced to top-up their schemes because the pension fund may be forced down the repayment queue in the wake of a bond issue.

Mr O'Brien will say that it is important the new powers do not inhibit "legitimate business activity."

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