Around 600,000 people will be saving for a pension by Christmas due thanks to a new plan which automatically places employees into schemes, the Government has announced.
The scheme, called “automatic enrolment”, has been described as the “biggest pensions shake-up in more than a century”.
It aims to tackle concerns about a growing old age poverty crisis, as people are living for longer but failing to put away enough for their later years.
Anyone aged over 22, currently earning more than £8,105 and working for a firm which is affected will be automatically enrolled in the scheme.
From October 1, the largest employers with 120,000 or more workers, must place eligible workers into schemes. Firms will gradually being enrolled over the next six years.
The Department for Work and Pensions (DWP) said that by May 2015 some 4.3 million more people will be saving for their retirement.
Iain Duncan Smith, Work and Pensions Secretary, said: "Automatic enrolment will get up to nine million more people saving into a workplace pension and for many it will be the first time they have had the opportunity to save.
"It will allow people to start planning for their retirement and this will make it easier for them to start putting something aside, along with a contribution from their employer."
Figures released on September 19 by the Office for National Statistics (ONS) showed the number of private sector workers paying into pension schemes has plummeted to its lowest level since records began in 1953.
Only 2.9 million people chose to place their money in to pensions, marking the first time active membership has dipped below three million.
The Government says 11m people in the UK are not saving enough for their retirement, and while pension saving has fallen across all age groups the decline has been steepest among those aged between 22 and 29, falling from 43% in 1997 to 24% today.
Some analysts have criticised the current pension scheme for being too complex, as people struggle to get real returns on their savings.
Saga director-general Ros Altmann described the UK's pension system as "the most complex in the world" and filled with jargon.
She also warned that people's confidence in pensions has been knocked by scandals, disappointments for people whose pensions have not turned out as they expected and low annuity rates which have "left many pensioners receiving much poorer value for their pension savings than ever before".
But in response to the new scheme, TUC general secretary Brendan Barber said: "This is a truly historic advance. For the first time every employer will be compelled to contribute to the pensions of their staff - a union objective for many years.
A new advertising campaign featuring TV stars including Theo Paphitis and Nick Hewer has been launched to raise awareness of the scheme.
