Dealers will be required to enrol all staff on to company pension schemes from the middle of the decade.

The Government wants employees to be automatically entered into occupational schemes, no matter how small the company, unless an employee opts out.

Auto-enrolment will be phased in from 2012 to 2016, starting with the largest employers.

It wants to make saving for retirement the norm for workers.

It estimates around seven million people are currently not saving enough.

The plan means dealers with more than 50 staff will be required to provide a company scheme.

Smaller dealers will be invited to participate in a new Government-run National Employment Savings Trust (NEST).

Companies will have to contribute the equivalent of 1% of a worker’s salary, rising to 3% in 2017.

A review of the proposal found that companies should be able to meet the requirements, as many already offer more generous pension schemes.

Employers currently pay an average
of 6.1% of employees’ salaries into
their pensions.

A recent study by the Association of Consulting Actuaries found that many of the UK’s larger employers anticipate having to scale back on these, because they expect to be forced to have to find extra money to pay for pensions for staff members who had formerly not been enrolled in the firm’s scheme, but would be likely to remain in it if they were enrolled automatically.

Pensions minister Steve Webb said estimates of levelling-down among employers were “overstated”.

The principle of automatic enrolment of employees into pension schemes was established in the Pensions Act (2008), which set out reforms designed to make saving for retirement the norm among employees.

The key feature was that all employers should provide an adequate pension scheme for their eligible employees – typically those aged 22 or more and earning at least £5,035 a year.

That has now been revised to a minimum of £7,475 annual earnings – the level at which lower rate income tax is paid.

Employers are to be given 13 weeks grace before enrolling staff to allow for employee turnover and temporary workers.

Webb said: “Our reforms will ensure that millions of people will start to save for their retirement, many for the first time.”