The government should set out a clear timetable for increasing minimum automatic enrolment (AE) pension contributions, after new research revealed widespread concern about retirement undersaving alongside employer support for phased increases, according to Pensions UK.

Research carried out by Yonder Consulting for Pensions UK found that 57 per cent of working-age adults were not confident they were saving enough to maintain their standard of living in retirement, while 82 per cent viewed undersaving as a significant issue in the UK.

Among respondents who expressed a view on whether AE contributions should rise, fall or remain unchanged, 31 per cent of the total sample believed pension saving through AE should increase, compared with 3 per cent who thought it should decrease.

Separate employer research found that support for higher minimum contributions increased substantially when businesses were given time to prepare.

More than 70 per cent of small and medium-sized employers supported increases where changes were phased, while 79 per cent supported giving businesses two years to prepare and 80 per cent backed a phased approach.

Among employers of all sizes, support for increases rose from 33 per cent to 52 per cent when businesses were given two years’ notice, or the change was phased in, while around one in 10 remained opposed.

The findings come after the Work and Pensions Committee launched an inquiry into whether minimum AE contributions should rise and how the cost of any increase should be divided between employers and employees.

Pensions UK argued that its research challenged suggestions that higher contributions would necessarily face widespread resistance from employers, with support particularly strong among small and medium-sized businesses and opposition concentrated among micro-employers.

The organisation has long called for minimum AE contributions to rise gradually from the current 8 per cent of qualifying earnings to 12 per cent, split equally between employers and employees, with the full increase reached by 2035.

It said increases should be phased and predictable, supported by a clear roadmap that would allow employers, pension schemes and payroll providers to prepare while limiting sudden pressure on household finances.

The call comes as the re-formed Pensions Commission considers longer-term pension adequacy, with its final report planned for spring 2027.

However, the government has confirmed that there will be no changes to AE contribution rates during the current parliament.

Pensions UK chief policy officer, Zoe Alexander, said: “With the second Pensions Commission finalising the package of proposals that will form its final report due next spring, we are approaching crunch time for policy decision-making on pensions adequacy.

“Increasing AE contributions to 12 per cent, shared equally between employers and employees, is the right decision to deliver long-term household financial security.”

Alexander argued that the research showed both public recognition of the under-saving challenge and greater employer openness to higher contributions when reforms were phased and clearly signalled.

“Now is the time to set a timetable,” she stated. “Delaying reform risks consigning future generations to low retirement incomes and benefit dependency.

“A gradual, predictable roadmap would give employers the certainty they need, help savers adjust, and build the consensus needed for a fairer and more adequate pensions system.”

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