The Government is to announce a scheme whereby workers are automatically enrolled into a new pension system in six years’ time.

It has conceded that too many people still have no pension fund and, despite seeking pension advice, they are often reluctant to do anything about it. From 2012 anyone not in an occupational pension scheme will be enrolled in ‘personal accounts’, unless they opt out.

To fund the scheme, staff will pay in 4% of their pay, with employers contributing 3%, with an extra 1% provided by the Government in tax relief. The proposals will affect up to 10 million workers currently not in employer-funded pension funds.

The idea was proposed by Lord Turner’s Pensions Commission, which has been dismayed at the lack of pension planning undertaken by many workers. Around 12 million people are currently estimated not to be saving enough for retirement, and although many take pension advice, the actual take-up of adequate pension provision is poor.

But there has been criticism of the scheme. David Laws MP, shadow work and pensions secretary for the Lib Dems, said: “The huge number of means-tested benefits which accompany them will lead to many people losing up to 85p of every pound they save in their pension fund.”

Employers too have complained that another compulsory pension scheme will be costly to administer and the National Association of Pension Funds has warned that companies with more generous schemesmight be tempted to scale them down in line with the new personal accounts.