A pensions expert has raised concerns that employees and employers are not putting sufficient funds into the government’s auto-enrolment scheme.

The Pensions Regulator estimates that almost 2.9 million workers have already been auto-enrolled into workplace pension schemes. Tens of thousands of SMEs will be staging in 2014 alone. Umbrella Company Employees contracting for a client will not be enrolled onto the latter’s workplace pension but will be enrolled into schemes selected by their Umbrella Services.

Workers included in the scheme will at first have 0.8% of their earnings diverted into the pension plan, provided they are aged over 22 and earn a minimum of £9,440. Tax relief from the government will add a further 0.2%, while employers will contribute 1% of the worker’s earnings. From October 2018, employers will be obliged to contribute 3%, with a further 1% coming from tax relief.

Pensions expert Tom McPhail has warned that these minimum contributions may well be insufficient. He said: “It is understandable that employers are just starting off with the minimum of contributions because their pension bill is going up; however, between them and their employees we need to get to a point where more money is going in, otherwise these employees are going to be disappointed when they do get to retirement.”

At minimum contributions levels, workers earning £22,000 a year who are enrolled in their mid-30s are likely to have a pensions income of less than £3,000 per annum.

Ministers and experts alike are urging people to set aside money for retirement at an early stage of their working lives.

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