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Earlier today, FTAdviser.com revealed that the European Commission (EC) had signalled that auto-enrolment was not against European consumer protection directives. (See story.)

The Pensions Bill already allows for automatic enrolment into trust-based pension schemes, but the government wanted to confirm that automatic enrolment into contract-based schemes would be consistent with European consumer protection directives.

Secretary of State James Purnell said: "There are currently 4.7m people who work for a company with a Workplace Personal Pension and are not members.

"This announcement will extend the benefits of automatic enrolment to millions more people - giving them the means to save for their retirement for the first time."

Pensions Reform Minister Mike O’Brien added: "We have worked hard with industry representatives and the European Commission to ensure we get this right and we are delighted with the outcome.

"Automatic enrolment is key to combating the inertia that prevents people from saving and I am pleased that millions of people who work for an employer who offers a Workplace Personal Pension will be able to benefit from this important social reform."