Unless the government’s upcoming review of auto-enrolment lowers the earnings trigger and extends the scheme to cover the self-employed, around 12m private sector workers will lose out by mid-2018, according to a survey by the Association of Consulting Actuaries (ACA).
The ACA stated AE has been a success to date - adding some 7.2m employees to the ranks of workplace pensions.
But based on ONS figures, it is estimated more than 40 per cent of employees of micro employers - an estimated 840,000 firms with fewer than five employees – earn below the £10,000 per year base threshold.
These employees are not eligible to be auto-enrolled into workplace pensions.
The survey found employee opt outs rising to more 21 per cent of eligible jobholders in smaller firms.
Upwards of 60 per cent of employees among the vast majority of smaller firms left to stage, may miss out on joining the ranks of pension savers, the ACA survey suggested.
Bob Scott, chairman of the ACA said: “Many have commented to date about the generally low level of pension contributions being saved into most AE schemes, and rightly so.
"Our survey underscores that in smaller firms the problem is heightened, with those joining AE generally at or near the minimum levels of total contributions, which amount to less than 2 per cent of earnings at present.
“The government needs to be absolutely straight with the public. The new state pension, whether triple or double locked, will not provide anything like an adequate retirement income for the vast majority of people.
"Without private pension savings, very many people will continue to rely on other state benefits in retirement, the level of which and their persistency being very uncertain,” he added.
Simon Webster, managing director of Facts & Figures Financial Planners, said that any shortfall is likely to be the result of the dire state of financial education that needs to start much sooner – from school age up.
“Self-employed have always had the option to set up and join a pension scheme of their own volition at any time, and nothing in that regard has changed.
“The fundamental issue is a lack of education regarding the need for retirement provision. Education is crucial, but is totally lacking. It goes back to schools, financial education is totally non-existent and it doesn’t prepare children for the world of work - and certainly not the world of pensions.”