David Blunkett, the work and pensions secretary, dropped a broad hint yesterday that employers will be forced to put all their workers into company pension schemes unless employees actively choose to opt out.

With the government looking for ways to defuse a pensions "timebomb" as people fail to save enough to pay for their retirement, Mr Blunkett said there was broad agreement that it was a good idea for individuals to take advantage of occupational schemes.

He suggested employees could be automatically enrolled in schemes but retain the right to opt out. Under the present system, employees have to voluntarily join the scheme.

Speaking after a speech to a conference organised by the Pensions Commission - appointed by the government to find ways of paying for a longer-lived population - Mr Blunkett said: "Just about everybody now accepts that where a pension scheme exists it is a good idea to enrol people into it and force them to opt out."

With the Conservative pensions spokesman, Malcolm Rifkind, coming out strongly against the idea that people should be forced to pay into a second pension in order to supplement the basic state pension, Mr Blunkett refused to be drawn on whether he would support a compulsory approach when the Commission issues its final report with recommendations in November.

"The question is how much further you go beyond information, education and facilitation," he said.

Mr Rifkind said the objections to compulsion were "powerful and overwhelming. It is wrong in principle for the state to tell people how they use their post-tax income".

Mr Rifkind challenged Mr Blunkett to come clean on suggestions that the government was considering taking an individual's assets into account when assessing their entitlement to a pension.

Mr Blunkett said during his speech: "We are going to see an even bigger divide in terms of assets than we see in terms of income in the future.

"People will inherit from parents, grandparents, aunts and uncles in some parts of the country very substantial assets, and they will need to take that into account and we will need to work out how we assist people who do not have assets."

Later, he added: "If people have got their own home and a basic income, then all of us have to ask the question of whether the realisation of that asset affects what we do on their pension."