Minister of State for Pensions Steve Webb.

A recent poll of Britain’s top worries in 2011 found that one of the main concerns people have is not having a pension or enough savings.

To send a link to this page to a friend, simply enter their email address below.

The message will include the name and email address you gave us when you signed up.

Email address

  Send link

To send a link to this page to a friend, you must be logged in.

The current financial context is challenging, but this year is going to set us on a better future for pension saving in Britain. From October 2012 millions of people will begin to build up savings or save more with the introduction of automatic enrolment and minimum employer contributions into a workplace pension.

All employers, starting with the biggest, will have to enrol their staff into a pension, and make a contribution of at least 3% of salary to the scheme. Staff will have to contribute as well and they will get help through tax relief.

People can choose to opt out if they wish, but those on an average income could lose around £600 a year on top of their salary if they do, as they would miss out on their employer’s contribution.

Automatic enrolment will help many low and middle-income workers, in particular, get access to a pension for the first time in their lives, so they can look forward to a more comfortable retirement alongside those who are better off and have always been able to sort out their own provision.

The biggest companies will be first to enrol their staff into a pension. We recently made some changes to the plan for rolling-out automatic enrolment, to give small businesses more breathing space in these difficult times. However, we will be starting on time in 2012 and all employers remain in scope.

However, workplace pensions are only part of the picture. The state pension is the cornerstone of people’s retirement savings in this country.

And because we recognise this, we have given a triple guarantee that we will uprate the basic state pension by the best of prices, earnings or 2.5% every year.

This means pensioners will get an increase of £5.30 a week from April, the biggest cash increase since the state pension was introduced.

The poorest pensioners will also see the benefit of this guarantee as the pension credit standard minimum guarantee rises by £5.35 a week.

Since we have restored the link to earnings as part of the triple guarantee, someone retiring with a full basic state pension will receive around £13,000 more over their retirement than they would have done before we made changes.

And as the economy and earnings improve we will spend an extra £45 billion on pensioners by 2025 because the earnings link will drive up the value of the state pension in the future.

But the current state pension system as it stands needs a complete overhaul. Many people say they find the system far too complex and confusing, and they are right. People have no idea what state pension, if any, they might get and this makes it very difficult to think about what other savings they might need on top.

That’s why we have set out plans for a simple contributory flat-rate state pension for the future, above the current level of the means test.

We want to see a simple, decent state pension that protects people from poverty and encourages effective saving for retirement.

With a reformed state pension, the triple guarantee giving pensioners a boost and the dawn of automatic enrolment, I am optimistic that 2012 will prove a turning point for pension saving in this country. And that’s something we can all look forward to.