Auto-enrolment has been as success so far, but there are still enormous challenges ahead, Ros Altmann has said.
Speaking at a conference organised by the Trades Congress Union, Altmann said that approximately 5% of employers had actually set up the scheme for their staff, but a further 1.8m small employers had yet to begin auto-enrolment.
The pensions minister said these employers required more help to choose a scheme, adding: "Many of them don't have a clue about pensions."
She predicted the current minimum contributions would quadruple over the next few years, but she had concerns over member engagement with pensions.
"The pensions industry has to make pensions more attractive to its customers, making pensions more engaging and ensuring they have a good experience. Otherwise what will happen? They just walk out. They can do that. The pensions industry needs to wake up," Altmann said.
In order for auto-escalation to work well, members "have to think it's worthwhile", they have to receive "engaging messages" from stakeholders and they need to be educated, according to the minister.
"I'd love to see auto escalation at some point. There's nothing stopping workers from doing it right now".
Auto-escalation is a concept where employees increase their contributions automatically in line with pay rise.
Altmann also urged the industry to develop "good new products and services" and adapt to the development in the new freedoms landscape.
"Old products simply won't do anymore", she said.
