The proposed legislation announced on Friday will extend AE to 18 year olds and lower earners.

The news has been widely welcomed across the pensions industry.

Renny Biggins, head of retirement at TISA, said: “TISA, like much of the industry, would like to see contribution rates increase to 12% (6% of employee contributions matched by 6% from the employer) over time, and we see these two changes as the bedrock of any future reform.”

But he said there should be flexibility in the framework, “as, while 12% will be a more appropriate rate for most households, there will a group for which it is too much or unaffordable.”

Kate Smith, head of pensions at Aegon, said the proposal was “fantastic news.”

She said: “The next step is to agree a timetable for implementing these enhancements.

“With the next General Election to take place not later than January 2025, we urge the Government to start phasing this in from April 2024.”

Pete Glancy, Scottish Widows head of pension policy, said: “Since a Government review proposed the expansion of automatic enrolment in 2017 we have been calling for this to be implemented as a matter of urgency.

“This is exactly the type of decisive Government action which is needed right now.”

Michele Golunska, managing director for wealth and advice at Aviva, said: “Now, in the middle of a cost-of-living crisis, is not the time for radical change but providing a clear ‘roadmap’ and timeline for these reforms will give employers and pension savers time to plan, helping to ensure better retirements.”

If approved by Parliament, the minimum age of AE enrolment will be lowered from 22 to 18.

In addition the Lower Earnings Limit for contributions will be abolished, enabling many more lower earners and part-time workers to take part.

The Department for Work and Pensions (DWP) said last week it would support the Private Members' Bill brought to Parliament by Jonathan Gullis MP.

Pensions Minister Laura Trott said: “We know that these widely supported measures will make a meaningful difference to people’s pension saving over the years ahead.”