Brits could see more than a fifth of their disposable incomes eaten up by pension saving as a result of minimum contribution increases over the next couple of years, new research has found.
Workers on the average national wage put aside approximately 4% of their disposable incomes saving into a workplace pension if they have been automatically enrolled into a scheme.
However, minimum contribution increases from 2% to 5% of earnings next month, and a further rise to 8% in 2019, could see pension saving account for 21% of wages after taxes and basic living costs.
The Finance & Technology Research Centre (F&TRC), which carried out the study, warned these increases might not be sustainable in the long-term and could result in rising pension opt-outs.
"As employee contributions rise, our research shows the burden it will place on the disposal income of the average UK employee could be too great," F&TRC director, Ian McKenna, said.
"What we don't want to see is employees opting out, making them even less prepared for their future and throwing away the additional 4% they receive in employer contributions and tax relief."
The research assumes that average monthly UK disposable income is £362, finding that workplace pension saving will increase from £14 every month to £69 after April next year.
It comes after analysis by Hargreaves Lansdown revealed that the UK government expects one million people to drop out of workplace pension auto-enrolment in 2019.
Once self-employed and non-eligible workers are included in the figures, the firm said a total of 13 million people are expected to be outside of pension saving by that time.
This will equate to 27.5% of members opting out of auto-enrolment by 2019, rising from 21.7% in 2018, and an estimated 10% in 2017, with incoming contribution hikes thought to be responsible.
"It is crucial that pensions and tech firms develop and deliver digital tools and services that will help consumers better manage their budgets in order to meet these increasing pension contributions and save for retirement," McKenna added.