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Government plans to create jobs for 16 to 24-year-olds could see more young people saving for retirement, according to the pensions industry.

The government has confirmed that as part of its kickstart scheme, employer minimum auto-enrolment contributions will also be paid by the state, which could result in more young people being enrolled into a workplace pension, according to Steven Cameron, pensions director at Aegon.

Mr Cameron said: “It’s great to see the chancellor again support automatic enrolment by allowing employers who take on new employees under the kickstart scheme claim not just earnings costs but also their national insurance contributions and employer minimum auto-enrolment contributions.

“While it is only those aged 22 and over who an employer needs to auto-enrol, this is a great way of kickstarting not just employment but saving for retirement.”

The kickstart scheme was announced in Rishi Sunak’s summer economic statement yesterday as a £2bn jobs creation scheme.

It will work by creating hundreds of thousands of high-quality six-month work placements aimed at those aged 16-24 who are deemed to be at risk of long-term unemployment.

The government will cover 100 per cent of the relevant national minimum wage for 25 hours a week, plus the associated employer national insurance contributions and employer minimum automatic enrolment contributions.

Although 18 to 22-year-olds joining work under the new kickstart regime will not be automatically enrolled in a pension due to current rules around age, Adrian Boulding, director of policy at NOW: Pensions, pointed out if you ask to join “your employer must pay into your pension”.

Under current rules, employers are required to automatically enrol employees into a workplace pension if they are aged 22 or above and earning at least £10,000 a year.

According to Aegon, the minimum wage for a 22-year-old working the minimum 25 hours would see them exceed £10,000 a year, and if they are working 35 hours a week it would be about £14,924.

Therefore, kickstarters could see contributions of up to £700 being paid over a full year into what for many will be their first pension, according to Mr Cameron.