Employers will have just two weeks to enrol new workers into a pension scheme under fresh rules designed to plug the country’s savings gap.

From 2012 employees will need to be provided with information about a pension scheme within a week of starting work, and must be enrolled in a scheme after a further seven days.

But unlike the compulsory occupational pension systems that operate in Sweden and Australia, auto-enrolment will allow members to opt out of a scheme if they choose.

The government’s auto-enrolment pension plan has been designed to ensure that low income workers save money for retirement.

But two thirds of UK companies say they are worried about the extra cost of providing pensions for all staff.

Seven million workers are estimated to have little or no personal retirement provision.

Companies will need to set aside at least 3 per cent of a worker’s salary in the new scheme. A further 4 per cent will be paid in by the employee and 1 per cent from the government.

Employers can choose to put the money either into a the new Government-sponsored personal accounts scheme or into their own private pension. If the private pension scheme has a high enough contribution rate they may be able to defer the auto-enrolment process for 90 days.

Two thirds of companies questioned said they were worried about the increased administration costs and the confusion of automatically enrolling all staff members into a pension scheme, according to a survey by PricewaterhouseCoopers.

The amount of money currently set aside in UK workplace pension schemes has been rising and is now on average over 15 per cent of an employee’s salary. But there are fears that companies will offset the additional cost of providing pension contributions for all staff by levelling down the contributions they currently make.

Andrew Tully senior pensions manager at Standard Life, the pensions and life assurance group, said the proposals detailed would add costs for employees at a difficult time.

The scheme has also been criticised for putting the onus of responsibility for saving on the individual.

Unlike final salary pension schemes, or pension provision offered to millions of public sector employees, auto-enrolment will leave savers carrying the burden of investment risk themselves, and will not provide them with a guaranteed income at retirement.

This has become a more pressing issue as the global recession continues. Plummeting global stocks have already knocked a third from the value of all defined contribution pensions, according to Aon Consulting.

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