The average amount employees saved into workplace pensions has slumped 5.5% in the five years since auto-enrolment was first introduced.
Figures from the Office for National Statistics (ONS) showed the typical employee/employer contribution fell from a high of 9.7% in 2012 to just 3.4% in 2017.
This is despite the number of employees saving into workplace pension schemes in the UK rising to 41.1 million last year – up from 39.2 million in 2016.
Workers who are aged between 22 and state pension age and earning more than £10,000 a year are automatically enrolled into a workplace pension scheme.
Eligible employees and their employers currently make a combined minimum contribution of 5%, which will rise to 8% from 6 April 2019.
The ONS’s findings echo a recent report from the Treasury committee, which called on the government to raise contribution rates beyond 8% in 2019/20.
Alistair McQueen, head of savings and retirement at Aviva, said:
“Millions of employees have embraced auto-enrolment in the belief it will deliver a comfortable retirement, but they are in for a shock with many on the road to living on less than the minimum wage in retirement.
“The proposed minimum saving rate of 8% of earnings, from 2019, is insufficient for millions of workers and we need to agree to further increases in minimum savings.
“Failing to do so will bring misery to millions of workers.”
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