Employees may be forced to save for their pensions after David Blunkett, the Work and Pensions Secretary, said that the present system was unsustainable.

He told BBC Radio 4’s Today programme that he wanted to reach agreement with opposition parties on the best way to deal with the issue.

"Over the last 50 years we’ve seen ... life expectancy rise by at least a decade and we’ve seen people want to retire earlier than they were. We have therefore the combination of fewer people actually in work," he said.

"When the pension system was set up, there were 10 people in work for every one in retirement, now there are four in work for every one in retirement. We can’t sustain that. I haven’t ruled out the issue of some means of ensuring that people do save."

Mr Blunkett will make his first speech in his new role at the National Association of Pension Funds’ annual conference in Manchester later today. The association plans to present him with draft legislation aimed at solving Britain’s occupational pensions crisis.

Employers have told the Government it must avoid a ‘one-size fits all’ method of tackling the pensions problem.

Sir Digby Jones, CBI director general, said compulsory contributions were not the answer because they would be viewed by both businesses and workers as another stealth tax.

A more sophisticated "mixed" solution was needed, he believed. "Although a simplistic panacea may have appeal, a more sophisticated mixed solution will have longevity and provide the long-term stability we all seek.

"Some of the best brains in the country have attempted to come up with a one-size fits all solution but have been unable to do so," Sir Digby said.

The CBI advocates voluntary saving into private pensions, extending working lives and increasing the spending on state pensions.

It wants to see employees automatically opted into company pensions schemes and increased incentives for both firms and workers to save.

The CBI has also suggested raising the basic state pension to the level of the pensions credit to reduce the need for means-testing and gradually raising the state retirement age to 70 to help fund this.

An initial report on the pensions crisis by Adair Turner, Sir Digby’s predecessor, found that 12.1 million people aged 25 and over were failing to save enough for a comfortable retirement. His full report will be published in November.

Meanwhile, it has emerged that thousands of former MG Rover workers could lose their pensions because the car maker’s main retirement plan does not qualify for a government rescue scheme.

Pension trustees have written to 6,500 people warning them that the main MG Rover Group fund and another plan for about 100 senior managers are "not currently eligible" to be assessed for the Pension Protection Fund (PPF).

The pension scheme has an estimated shortfall of about £400 million. The £17 million trust for the Phoenix Four directors and their families is unaffected.

The uncertainty over the pensions of MG Rover’s former staff comes as it is thought that the independent trustees could be taking legal action against Phoenix Venture Holdings (PVH), the parent company, which is still trading.

The pension plans for the workforce and managers have failed to meet the PPF’s criteria for state help because they are multi-employer schemes, which are not entitled to help unless all related companies are in administration.

All MG Rover’s main subsidiaries are in administration except PVH which still holds assets, including a stately home.

Martin Sheppard, 38, who joined the Rover pension scheme 16 years ago, said: "This is the icing on the cake; no job, not much of a redundancy package, it’s the final insult."

The Transport and General Workers' Union (TGWU), which represents MG Rover workers, said that officials are optimistic that a solution would be found. "The detailed situation is complex, but the T&G is confident that people will receive their pensions," it said.

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