2012 will see British workers automatically participate in company pension schemes.

Individuals will be obliged to contribute at least 4% of their pay, which will be matched by contributions from employers (3%) and the government (1%).

Today about 40% of the British working age population are enrolled in a company or personal pension scheme, a number expected to rise to 60% with the new reforms in place.

The Pensions Policy Institute is hoping that the current 14 million private pension holders will turn into 21 million following the changes.

The current 5 million workers actively participating in defined contribution schemes is expected to rise to 17 million by 2050.

A major concern, however, is the fact that under said pension schemes individuals rather than employers bear the risk of investment volatility.

According to PPI research director Chris Curry, from 2012, an increased risk of investment performance will increase the need to turn pension savings into retirement income and retirees will have to engage more and more with the retirement and annuity markets.