The government is to scrap the compulsory retirement age of 65, allowing employees to seek the agreement of their employer to work into their 70s.

The move may be seen as reflecting the high levels of pensioner poverty in Britain, which at 30% are among the worst in Europe.

 The European Union agency Eurostat defines poverty as having an income less than 60% of the national average wage. This applies to 30% of Britain’s pensioners, putting Britain on the same level for pensioner poverty as Lithuania.

The alarming figures compare with 17% for Germany, 13% for France and 5% in the Czech Republic, and make Britain second-worst for pensioner poverty in Europe, after Cyprus.

With its plan for the new pensions scheme the National Employment Savings Trust (NEST – formerly known as the Personal Accounts Scheme) the government is generally encouraging the individual to take control of pensions saving and retirement planning, at a time when companies are reducing their commitment to pensions as a means of cutting costs.

The government’s plan will not affect the point at which the state pension can be claimed. However, the basic state pension is currently just £95.25 for a single person, which for those with no savings and who therefore qualify for pension credit would be topped up to £130 per week for a single, or £198.45 for a couple.

As the government rebrands its personal pensions scheme as NEST (National Employment Savings Trust), industry experts are warning savers not to wait for the new workplace pension scheme, which will not be fully operational until 2017.

Pensions experts at the funds management company Hargreaves Lansdown have warned that employees who wait 7 years more for a NEST pension (formerly known as the Personal Accounts Pension Scheme) were losing a considerable part of their eventual retirement income.

“Every year of delay means a lower eventual pension. Don’t wait for your employer or the government to take the intiative, start saving for retirement today,” said Tom McPhail, head of pensions research at Hargreaves Lansdown.

While enrolment of workers into NEST pensions will begin in 2012, it will be rolled out gradually, with the last employees due to be included in 2017.

As the official government occupational pension scheme, NEST consists of an employee contribution of 4% of salary plus an employer contribution of 3% of salary, and a further 1% in tax relief.