Over a third of auto-enrolled savers who are only paying the minimum one per cent contribution into their schemes expect it to provide them with a comfortable or secure retirement, according to NOW: Pensions.

The mastertrust has found that over a quarter of savers say they are only paying one per cent of their eligible earnings into their pots. Of those, 39 per cent believe that they will be able to afford holidays and trips to restaurants on a regular basis on the income generated from their pensions.

NOW:Pensions has said that the minimum contribution, including the one per cent employer contribution, equates to a saving of just £400 a year, based on the average UK salary of £27,600.

The provider’s research has also discovered that 24 per cent of savers don’t know how much they are contributing towards their pension and that over a quarter expect to save just £60,000 or less, yet still expect their retirement to be comfortable or secure. A further 54 per cent admit they don’t know what size pension pot they may have at retirement.

On average, NOW:Pensions has found that those with a workplace pension expect to save £150,477. A 65-year-old retiring today with a pension pot of £150,447 would receive an income of just £7,537 per year, which equates to £628 per month.

The research has also revealed that perceptions differ between genders, with men expecting nearly twice (£184,000) as much as women (£102,000) in retirement.

NOW:Pensions has warned that savers are being lulled into a "false sense of security".

NOW: Pensions director of policy Adrian Boulding said that auto enrolment was delivering on its objective of getting people saving, but that it was imperative that workers were not given a false sense of retirement security given that so many of them were relying on their workplace pension as their only form of retirement saving.

“It’s just not realistic to think that contributions of £400 a year will lead to retirement pots averaging £150,000,” Boulding said.

“For the majority of auto-enrolled savers, the reality is that minimum contributions won’t be sufficient for a comfortable or secure retirement. For auto enrolment to live up to savers’ expectations, government need to give careful consideration to increasing minimum contributions. If they don’t take action, they run the risk of millions of disappointed retirees.”

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