Employers will be forced to contribute to occupational pension schemes unless many more companies start making voluntary payments on employees' behalf, the government warned on Tuesday.

Alan Johnson, the work and pensions secretary, signalled the tough approach in the wake of the Pensions Commission's interim finding that employers' contributions of five per cent of salary increases pension scheme membership fivefold.

Mervyn Kohler, head of public affairs at Help the Aged, said: "The hey day for employers' occupational pension schemes was in a labour market which saw staff retention as a key issue.  

"Today's more mobile labour market no longer puts the same premium on this issue.  But if employers no longer feel the need to contribute to pension schemes, the task of building an adequate pension becomes almost impossible for the average employee.  

"Hence it is very pertinent to consider compulsory employer contributions, such as the Australian government introduced a decade ago, and encouraging to see the new secretary of state veering in this direction."

Stakeholder Response: Association of Consulting Actuaries

A spokesman for the ACA said: "Whilst the ACA and its members are keen to encourage as many employers as possible to contribute to occupational pension schemes, there are real dangers for many scheme members in the government advocating minimum employer contributions, particularly at a low level like five per cent.