The Government's Employer Task Force, set up last year to look at how to alleviate the pensions crisis, said the Government could be forced to look at "drastic solutions", such as compelling firms and workers to pay into occupational schemes.

The report did not go so far as recommending compulsion, instead waiting to see if current measures could alleviate the problem.

Should the Government choose compulsion, firms could be forced to pay billions of pounds according to the CBI. But the task force, headed by former Sainsbury and Prudential boss Sir Peter Davis, said employers no longer saw the short or medium-term benefits of providing pensions to workers.

He said "We are in a last chance saloon for voluntarism" adding that without increased savings from employers and employees, "the Government may be forced to look at more drastic solutions."

Contributions of between 10% and 15% are required with the employer paying up to two thirds of this amount but employees must also take responsibility for their provision, the report said.

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