The Financial Conduct Authority's Financial Lives survey should act as a “wake-up call” for UK workers and the pensions sector, Now: Pensions has said.

The survey has painted a worrying picture of saving levels and understanding among the UK population of pension products. According to the FCA, only a quarter of all 18-24 year olds have a DC pension, while 70 per cent of them have no private provision whatsoever.

Now: Pensions director of policy Adrian Boulding has said that the FCA’s findings have shown that auto-enrolment is letting young people down.

“The FCA study should act as a wake-up call,” he said. “It’s never too young to start saving for your future but at the moment, employees aren’t auto enrolled into a workplace pension until they are 22."

Boulding added that lowering the threshold to 16 would have less of an impact as just 10 per cent (100,000) of 16 and 17 year olds would earn enough to be auto enrolled, but if the age was lowered to 18, then around 1.5 million 18-21 year olds would qualify, based on data from the Office for National Statistics.

Also commenting on the report, Aegon head of pensions Kate Smith said that it was shocking that 15 million weren’t saving into a pension scheme. “Too many people are excluded from auto-enrolment: low-paid workers, some with multiple jobs and the self-employed, including gig workers,” she said.

“The review of auto-enrolment, due to report by the end of the year, must address what is clearly a huge gap in the nation’s savings policy. Pensions should be there as a default for all, no matter how much people earn, across how many jobs, in whatever form of employment.”

Smith suggested that some of the policies that could be put in place to rectify the savings gap include removing the contributions bands, making all basic earnings pensionable, and automatically increasing contributions. She added that auto-enrolment contributions should also be restructured to reflect matching at different levels to address the affordability and adequacy dilemma.

Meanwhile, Just Group communications director Stephen Lowe, said that the report had shown that people have a distinct lack of understanding about the decisions they face when accessing their pensions.

The FCA has found that two in five of those aged 55-64 who are receiving an income or have taken a lump sum from their defined contribution pension are still employed; 17 per cent are self-employed, and a quarter are unclear how they have taken money out of their pension – whether it’s through an annuity or drawdown.

“This lack of understanding should give us all cause for concern,” said Lowe.

“It indicates consumers are not well-informed or confident in the decisions they make about retirement incomes, and this is likely to lead to poorer outcomes for these savers over the longer-term. It’s clear there’s some confusion among consumers about what different products offer in the way of retirement incomes – one in ten thought income drawdown would provide a guaranteed income for life.”

Lowe added that the need to offer consumers default guidance was becoming increasingly urgent.

“By automatically enrolling savers into a free, independent guidance session we will encourage better understanding and greater engagement which should in turn lead to better decisions and outcomes for savers,” he said.

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