More than six million people have begun saving for their retirement since the introduction of auto enrolment but 68% of workers are unaware that over the next few years there will be increases to the minimum contributions they’ll need to make.

Despite the changes, nearly four in five (78%) people said they will stay enrolled in their workplace pension scheme, while only 3% will opt out when contributions increase, according to a Scottish Widows report.

Under the ‘automatic re-enrolment’ rules, companies must automatically enrol eligible staff (those aged between 22 and State Pension age and earning at least £10,000 a year), every three years from a firm’s staging date. Workers can opt out if they choose.

How much will I need to contribute?

Under the current rules, the total minimum contribution you must make into your pension is 2%. This is made up of 1% each from an employer and employee.

From 6 April 2018 until 5 April 2019, the total minimum contribution will be set at 5%, made up of 2% from an employer and 3% from an employee.

From 6 April 2019, the total minimum contribution will be set at 8%, made up of 3% from an employer and 5% from a member of staff.

Inadequate savings

The findings also revealed that over two-thirds (35%) of people working for large businesses and almost half of those working for medium businesses are not saving adequately for retirement. However, the number of employees from smaller companies now saving sufficiently has actually increased from 40% to 44% in the last year.

Over a quarter (27%) said they can’t save any more into their workplace pension due to financial pressures. And younger generations are most likely to be out off saving because of a lack of understanding.

Those aged 22-29 would be twice as likely as the rest of the nation to save more into their workplace pension if they had more information from their employer, while a third think their employer should also offer advice on how to budget for retirement.

Younger generations were also found to place a high value on employer contributions to their workplace pensions. Those aged 22-29 and 30-39 are the most likely of any age group to choose to save into a company scheme because their employer contributes too, at 60% and 58% respectively, with 26% of 22-29 year olds and 27% of 30-39 year olds wanting employer contributions to increase a little year-on-year.

David Holton, director of pension propositions at Scottish Widows, said: “Young people, in particular, appear disengaged with workplace savings but the good news is that they are twice as likely as the rest of the nation to save more if they had more information from their employer.

“As a result, the industry and employers alike need to continue encouraging all workers by providing them with ongoing support on the benefits of being more engaged with longer term savings.”