The proportion of employees who contribute to a workplace pension has increased by almost a quarter, new figures from the Office for National Statistics (ONS) showed.
Around 73 per cent of UK employees had an active workplace pension scheme in 2017, up from less than 47 per cent in 2012.
But contributions are still low, with almost half of private sector employers with defined contribution (DC) schemes contributing less than 2 per cent of pensionable earnings in 2017.
This figure compares to around 6 per cent in 2012.
Analysis by the ONS showed employers had not necessarily reduced their contributions since 2012 but that automatic enrolment has led to an influx of new savers at low rates, changing the distribution of employer contribution rates.
Similarly, employee contributions were concentrated at low levels in 2017.
Around 45 per cent of private sector employees with DC schemes were contributing less than 1 per cent of pensionable earnings, and only around one in three employees were contributing 3 per cent or more, the ONS said.
Alistair McQueen, head of savings and retirement at Aviva, said these minimum saving levels meant millions of workers would be set for disappointment in retirement.
He said: "The minimum levels are designed to generate an income in retirement equivalent to just 40 per cent of your working income. Most will want - and may be expecting - more than this.
"It's great that more are saving for their retirement. Our next challenge is to encourage the more to save more.
"Aviva advocates minimum savings closer to 12 per cent of earnings is what many should be aiming for."
Sir Steve Webb, director of policy at Royal London and the former pension minister responsible for introducing auto-enrolment, said the figures showed "the champagne needs to be put on ice".
He said: "Nearly half all employers were contributing the bare minimum of 1 per cent of wages in 2017, and it seems likely that they will continue to contribute at the legal minimum level as contribution rates rise into 2019.
"A combined contribution rate of 8 per cent between worker and firm is simply not good enough for most people. The hard work of automatic enrolment will be in supporting workers and firms to get these contributions up to more realistic levels.
"The single most important thing that the government could do would be to ensure that when people get a pay rise they automatically increase their contribution rate unless they actively opt out.
"We know that this approach works in the US and it is time to do the same in the UK if we are to avoid a generation of workers who will simply be unable to afford to retire."
Auto-enrolment minimum pension contributions increased last month, from 2 per cent to 5 per cent.
In 2019 it will increase again to 8 per cent, with the employee paying 5 per cent.
There are now more than nine million people auto-enrolled in a workplace pension scheme.
Nathan Long, senior pension analyst at Hargreaves Lansdown, said: "Now is not the time to panic. With contribution levels due to reach 8 per cent in April 2019, the priority is to reinforce the benefits of retirement saving when pay packets remain stretched across the country.
"It will be interesting to see how previously paternalistic employers react when all businesses are dragged up to paying in contributions at higher levels, we may see further voluntary contribution hikes as employers strive to offer competitive benefits."
maria.espadinha@ft.com
