Nearly two-thirds of the UK population are unwilling to contribute more than 5% of their salary towards a workplace pension, Friends Life said today.
According to a survey carried out by the life and pensions provider, 26% of people would chose not to be a member of a workplace pension scheme, while another 35% are not willing to contribute more than 5% of their salary to their pension pot.
Despite this, only 14% thought that saving the equivalent of 8% of their salary every month would be sufficient to fund a comfortable retirement. This is the total level that pension auto-enrolment will reach with combined employer and employee contributions plus tax benefits.
Colin Williams, managing director of Corporate Benefits at Friends Life, said: 'Auto-enrolment is the first step in encouraging people to save for the long term and consider their financial security in retirement.
'The current economic climate is undoubtedly squeezing employees' incomes, but to prevent retirement poverty we have to motivate people to take responsibility and start saving early. The low starting rate for contributions under auto-enrolment should help in this respect.'
Only 13% of those surveyed by Friends Life said they would be happy to pay more than 10% of their wages into their pension savings, despite people potentially having to save a substantial amount to ensure they can sustain the retirement lifestyle they want.
Almost half (41%) of those questioned said increased tax relief would encourage them to save more for retirement, while 31% said having a better idea of the income they would receive at retirement would help.
However, one in five (20%) said nothing would persuade them to increase their contributions, and nearly 9% of those questioned said even the deduction of a 1% pension contribution from their salary would mean they struggle to make ends meet.
Williams added: 'The easiest way to prevent retirement poverty is to encourage employees to start saving early. If auto-enrolment fails to kick-start the fight against retirement poverty, the government will have to consider other options, which may include compelling people to save rather than just nudging them along.'
