The full roll out of auto-enrolment will still leave 12 million workers excluded from the policy, leaving them to rely on the state pension and other benefits in retirement, a report by the Association of Consulting Actuaries (ACA) has warned.

In the final report of the ACA 2017 Pension trends survey, it emerged that 40 per cent of employees in smaller firms would still not be eligible for auto-enrolment, once the government’s auto-enrolment scheme is fully implemented in 2018.

The report, surveying 466 employers with over 760 pension arrangements, found that when coupled with the UK’s self-employed workforce, those relying on the state in retirement will hit 12 million.

However, the report also stated that 57 per cent of employers believe the self-employed should be brought into auto-enrolment, despite this, 44 per cent of employers are reluctant to support the rise in minimum contributions to 8 per cent when it comes into effect post-April 2019.

In addition, the ACA found a number of “worrying trends”, such as rising employee opt-out rates, with one in four employees in smaller firms choosing to opt-out, while 46 per cent are opposed to lowering the auto-enrolment trigger point for employees currently earning less than £10,000.

Reacting to the findings, ACA chairman Bob Scott called on the government to implement a next steps strategy, to nullify the “potential danger of rising opt-outs”, while seeking a “gradual, but essential increase” of the default level of contributions into DC schemes.

“A gradual increase in minimum contributions to eventually around 16 per cent of earnings should be a target. Without commitment from government to ensure that sums saved into auto-enrolment are meaningful, we see little prospect that as a society we will be able to address the fears of a growing gulf in retirement incomes from one generation to the next”, Scott said.

He added: “To give subsequent generations a decent chance of enjoying secure, adequate retirement incomes as life-spans generally extend, we call on the government to review its spending plans, tax rates and incentives to help support this objective at a time when increases in wages and salaries are likely to remain muted for many.”

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