Automatic enrolment  

Employers turn to advisers for auto-enrolment help

Generally, employers said they were confident about paying the new rates, and were relaxed about the cost, perceiving it as a small proportion of their overall costs.

Conversely, very few workers were aware their contributions would be increasing in 2019, but were generally neutral or positive about the increase, stating it would help them save more for their retirement.

Ian Browne, pensions expert at Quilter, said: "Our own analysis shows those earning between £45,000 to £60,000 will see the smallest wage increase this tax year after the auto-enrolment rate hike, with their wages going up by just 0.6 per cent.

"However, the long-term impact of the rise in contribution rates will mean that pension pots will be about 66 per cent higher at retirement than they would’ve been if contributions stayed at 3 per cent.

"The impact will be felt across the wage spectrum with those earning over £60,000 seeing around a 1.32 per cent increase and those earning around £30,000 only taking home about 1 per cent more than the previous year."

Mr Browne warned that relying solely on the power of inertia for the continual success of auto-enrolment remained a real risk when considering the general low level of pension contributions.

He said: "Over the course of the next year the industry and government need to do more to ensure we are boosting engagement and education.

"We need to hammer home that foregoing yet more of their salary is not only worth it, it is necessary, because without investing today the current generation risks poverty in later life."

The DWP is due to publish the final version of the report later this year.