Most employees are being defaulted into pension contribution levels that leave them with less than a one-in-three chance of achieving a moderate retirement income, according to a report from Hymans Robertson.

The consultancy’s Employee benefits 2026: trends and employer priorities report found that 84 per cent of employers set employee default contributions at between 3 and 5 per cent, while two in three default contributions were at 10 per cent or less.

For an average earner, this equated to less than a 31 per cent chance of reaching a moderate retirement income of around £31,700 a year after tax.

Although the report noted that more than half of employers now use master trusts, and salary sacrifice is almost universal, it found that only 27 per cent shared some or all of their national insurance (NI) savings with employees, and just 7 per cent shared the full savings.

Hymans Robertson head of DC corporate consulting, Hannah English, said employers did not necessarily need larger budgets to improve outcomes, but rather a clearer understanding of employee needs and a willingness to adjust design.

She warned that rising costs, changes to NI relief on pension contributions, and the forthcoming Pensions Commission review would push employers to reassess reward strategies, arguing that measures such as higher defaults or auto-escalation could materially improve adequacy without significantly increasing costs.

Meanwhile, the report showed that group income protection (GIP) provision varied widely between companies, with 53 per cent of employers offering it to all staff, 31 per cent restricting access and 16 per cent offering none at all.

Notably, only one in three GIP policies insured employer pension contributions during long-term absence, and around a fifth of employers had sick pay arrangements that did not fully align with GIP deferral periods, potentially leaving employees exposed to income gaps.

English argued that although cost pressures were significant, relatively small structural changes and clearer communication could strengthen fairness and resilience without requiring wholesale redesign.

On the financial wellbeing front, the report identified a gap between what was offered and what employees said they valued.

While only 3 per cent of employers offered none of the eight core forms of financial well-being support identified, most focused on lower-cost options such as discount schemes, educational materials and webinars.

More personalised services were less widespread, with 47 per cent offering access to a financial adviser and 31 per cent providing longer-term coaching.

In addition, nearly 40 per cent of employers offered four or fewer types of financial wellbeing support and had no plans to broaden provision, despite separate research cited in the report showing that 47 per cent of employees wanted better support and 61 per cent said it would make them more likely to stay with their employer.

English concluded that while employers were making progress in a challenging environment, the gap between provision and expectations represented both a retention risk and an opportunity to enhance long-term financial resilience.

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