Radical changes to the pensions system will give millions of older people a more secure future, MP Steve Webb claimed yesterday.

He said the new measures will give more people access to a workplace pension, which will be a major boost to middle income earners.

The Pensions Bill will also ban bosses from forcing staff to retire at 65, which campaigners welcomed as a significant boost against age discrimination.

It will also bring forward the increase in the state pension age to 66, four years earlier than previously planned.

Pensions Minister Mr Webb said the measure was the next step in helping hundreds of thousands of West people save for their retirement.

He said at the moment employers do not have to contribute into a pension scheme for their staff and many choose not to – and as a result, as a country the UK is under-saving for retirement.

The Thornbury & Yate MP said: "This Bill will radically transform the pensions landscape in this country. Millions of people, who currently have little or nothing put by for their retirement will, from 2012, find themselves enrolled in a workplace pension – setting them on the road to a more secure future."

He said the reforms could see middle earners gaining well over the equivalent of a year's pay if they chose to save in a workplace pension.

Based on employer contributions of three per cent, people earning an average income could gain an extra £650 a year – or around £30,000 over their working life.

The end to the default retirement age, except for certain jobs such as police and air traffic controllers, will be phased in between April and October.

Employment Relations Minister Ed Davey said it was great news for older people, business and the economy.

"Retirement should be a matter of choice rather than compulsion – people deserve the freedom to work for as long as they want and are able to do so," he said.

"Older workers can play an incredibly important role in the workplace and it is high time we ended this outdated form of age discrimination."

He said allowing people to work longer will boost the economy and increase the size of the workforce, creating more opportunities for the young.

Michelle Mitchell, director of the charity Age UK, said: "With people living longer and healthier lives retirement patterns are changing rapidly and employment regulations need to be brought in line with workers' legitimate aspirations."

But the Institute of Directors says ending the retirement age will reduce flexibility for employers and the Federation of Small Businesses said the change could lead to more employment tribunals.

Gerry Jones, chairman of the IoD in the South West, said the Government's proposal to abolish the default retirement age showed Ministers were less focused than they should be on supporting entrepreneurs and the business community.

"Removing the DRA, which gives employers flexibility in managing employees, is incompatible with the Government's stated desire to boost enterprise and create new jobs," he said.

The Bill will also bring forward the already-planned rise in the state pension age to 66 – it will now happen in 2020, four years earlier than planned.

Labour's pensions spokeswoman Rachel Reeves said: "It is clear that on top of the VAT hike, these changes mean pensioners will be worse off next year under this Tory-led Government.

"Pensioners will be asking why they are having their pensions eroded when they have no responsibility for causing the financial crisis."

The National Pensioners Convention said this was an attack on poorer members of society, as life expectancy was linked to affluence.

NPC general secretary Dot Gibson said: "There is a myth that we are all living healthier lives for longer and very little evidence that there are sufficient jobs around for everyone to keep working.

"This policy isn't about choice, it's about cutting costs and making the poorest pay the highest price.

"We must establish the right to a decent period of retirement otherwise we will soon see people working till they drop."

The legislation will also move the uprating of pensions to a less generous index.