Workers at the country’s largest firms will start paying into qualifying pension schemes – unless they choose to opt-out. Their employer will also contribute.

About 600,000 people will be enrolled by the end of the year and by May 2014 some 4.3 million will be saving for the retirement. Minimum contributions start at 1% and by October 2018 build to 4% for employees which equates to 8% overall (employer at 3%, employee at 4%, and tax relief at 1% combined) of a band of earnings.

Pensions minister Steve Webb said: “We are proud to be introducing this truly historic change, which will radically alter the way we save for our old age, and see millions more people putting something aside for the future.

“From today, we will start seeing large firms, such as banks and big supermarkets, automatically enrolling their staff into a workplace pension. Between now and 2018, more and more employers will come on stream – right down to the smallest ones.

“If we can get between 6 and 9 million more people saving in a pension by the time all employers are in, that’s a genuine savings revolution.”

The Department for Work and Pensions (DWP) said about 11 million people are not saving enough for retirement and research suggested less than a third will opt-out.

TUC general secretary Brendan Barber said the change would reverse decades of pension under saving.

He said: “UK workplace pensions were once the envy of the world. But too many employers have walked away from their responsibilities, and now just one in three private sector workers are in a pension, threatening many with a miserable retirement.

“This is why automatic enrolment into pensions is so welcome. Every employer will now have to play their part – a victory for many years of union campaigning.

“With this government and the last helping ensure a wide consensus around the reform package, we have some certainty that we are now at the beginning of a pensions new deal. Of course it can, and should, be made better. But we now have what should be a stable framework.

“With similarly big issues like the future of social care still to be addressed, important lessons can be learnt from the success of pension reform.”