Iain Duncan Smith has come under after his department spent more than £8.5m on an advert featuring an animated hairy monster to promote the Government’s pension reforms.

The Department for Work and Pensions ad campaign tells viewers not to ignore the workplace pension as the next phase of auto-enrolment rolls out to include smaller businesses and their employees.

But Labour said it was not an “effective or efficient” way of spending taxpayers’ money at a time when it has slashed the Independent Living Fund for 18,000 disabled people, withdrawn housing benefit for all those under the age of 21, lowering the welfare cup to £23,000 and £4.5bn a year cuts to working tax credits.

And Labour MP Stephen Pound said: “What a ridiculous waste of money. This monster may well frighten the kids but the cuts terrify my constituents even more.

“A character from a future Star Wars film may be a source of fun to the Tories but their policies are seriously hurting the weakest in society and there’s nothing funny about that.”

The ad sees the huge animated monster, named ‘Workie’ approach small business owners and employees of small employers in a park and telling them not to ignore the workplace pension as it becomes law.

It will be shown at 7.25pm on Wednesday night between episodes of Emmerdale and Coronation Street.

The team behind the campaign, which was made by the Department for Work and Pensions and the Pensions Regulator, says ‘Workie’ has a “striking physical embodiment of the workplace pension”.

It is the latest bizarre advertising video released by the DWP. In July it published a Vine video that was a re-release of a longer YouTube video launched two years ago that promoted its landmark initiative to automatically place employees into workplace pension schemes.

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Ros Altman, the Pensions minister, defended the “fun and quirky campaign” that sends out a “very serious message”.

“We need everyone to know they are entitled to a workplace pension – and we need all employers to understand their legal responsibility to their staff, but also to feel more positive about engaging with workplace pensions.”

However Labour questioned the decision to spend £8.54m on the advert.

Shadow pensions minister Nick Thomas-Symonds MP said: “Getting workplace pensions right is an important job and auto-enrolment brings great benefits, so the government is right to do some public awareness campaigning.