A report from Pensions Policy Institute has revealed that that the success or failure of the government's private pension reforms will depend on the reaction of employers and employees.

The reforms are likely to increase the number of people saving in a pension and could increase the total amount saved, according to new Pensions Policy Institute (PPI) analysis. However, the overall impact of the reforms on private saving – whether positive or negative – will depend crucially on how employees and employers react when the reforms are introduced.

The government plans to introduce wide-ranging pension reforms from 2012. Employers will, for the first time, be required to auto-enroll eligible employees into a work-based pension scheme or a personal account and to contribute 3% of earnings between GBP5,000 and GBP33,500 if employees do not opt out.

Niki Cleal, director of PPI, said: Even though the number of people saving in a pension is likely to increase substantially, there may, or may not, be a significant increase in the total amount saved in private pensions. This depends on how employers with existing pension schemes respond to the additional costs that they may face due to automatic enrolment.

Given the significant impact that employer and employee behavior will have on the outcome of the government’s private pension reforms, it is important to collect further evidence on their likely responses.