The number of private pension holders is expected to rise by half from 14 million up to 21 million following Government pension reforms in 2012, according to a think tank.

The Pensions Policy Institute (PPI) said 60% of the working-age populous would be saving for their retirement through a company or personal pension - compared with the current 40%.

Workers will automatically be enrolled in company pension schemes from 2012, although they will still be able to opt out if they wish.

Minimum contribution levels will also be brought in, with individuals having to pay in at least 4% of their pay to a pension, while employers will contribute 3% and the Government will add 1%.

But the PPI said the reforms, along with changes that are already taking place to the pensions landscape, would lead to a big increase in the number of people saving for their retirement through defined contribution pension schemes.

The number of people who are active members of these schemes, under which individuals and not their employer bear the risk of investment volatility and increased life expectancy, is expected to soar from just five million now to 17 million by 2050.

At the same time, membership of more generous defined benefit schemes, such as final salary pensions, is expected to drop from 2.5 million to 1.5 million during the same period.

Chris Curry, PPI research director, said "The major Government reforms about to be implemented for state and private pensions will significantly alter the retirement income landscape in the UK."

"The Government's state and private pension reforms are likely to mean that more pensioners will receive income from state and private pensions in the future."

The PPI is an educational charity which provides non-political, independent comment and analysis on public policy on pensions and the provision of retirement income in the UK. It publishes regular research reports, briefing notes and holds policy seminars on a wide range of topics.

Copyright © Press Association 2009