Pension savings to be hit by auto-enrolment Average workplace pension contributions could fall over the next few years as millions of employees are automatically enrolled into company schemes, warns a new report. In a survey published on Thursday, the Association of Consulting Actuaries said that employer and employee contributions into defined contribution schemes average between 4.5-7 per cent and 4-4.5 per cent, respectively, of a worker's earnings. IN Pensions The report warns that average contribution levels will decline "perhaps quite considerably" as workers are automatically signed into schemes where their employers pay only the minimum required. "With most employers seemingly auto-enrolling at the minimum level of contributions (2 per cent of qualifying earnings), we can expect average contributions to decline over the next few years before climbing in 2018, when the minimum rises to 8 per cent," said Andrew Vaughan, chairman of the ACA. It would seem logical that as more midsized employers meet their staging dates, they too will auto-enrol at these very modest contribution levels, which are well below the levels our survey found from the employers who already provide schemes. The report found support among employers for schemes which automatically escalate a worker's pension contributions in line with future pay rises, such as "Save More Tomorrow," which is established in the US. Nearly six out of 10 UK employers who took part in the survey supported "automatic escalation," with the concept welcomed by both large and small companies but finding less support from midsized groups. The survey also predicted decreased support for automatic enrolment as it rolls out to millions of small (5-49 employees) and micro (4 or fewer employees) employers over the next four years. The number of people choosing to leave a scheme in the first month after being automatically enrolled is thought to be below 10 per cent. However the survey found a median band of small employers was budgeting for nearly a third of employees to opt-out. "Our findings point to concerns about the preparedness of small employers and the feasibility of encompassing three-quarters of a million micro employers into the system over a relatively short period from 2015," said Mr Vaughan. We believe the stresses on firms, providers and the compliance regime might simply be too great and to push ahead with a pause might undermine the successes [of AE] to date. One-fifth of the 308 employers who responded to the survey, which took place in the summer of 2013, had 5,000 or more staff.