Latest figures released by the ONS show that since 2012, total contributions are increasing, but median contribution rates are lower.

The latest statistical bulletin released by the Office of National Statistics (ONS) said the total increase was due to the large increase in the number of people now contributing.

Lower median contribution rates are due to the introduction of automatic enrolment where employees are making the minimum contribution, decreasing the overall median.

However, median contribution rates are expected to increase as the planned implementation of higher minimum contribution rates proceeds, the document states.

Malcolm McLean, senior consultant at independent consultancy Barnett Waddingham, said the data sends two clear messages to the government.

He said: 'The overall effect of automatically enrolling millions of new savers into workplace pension schemes would be to increase the numbers contributing, but on the basis of minimum contribution levels, reduce the median amount being saved.'

"This will inevitably increase as the 'phasing in' process rolls out but for most savers the amount will still be inadequate."

McLean suggests a system of 'auto-escalation' of contributions will address this issue.

The second message, he said, was that the government must tread carefully with any changes to tax relief.

'If the arrangements for tax relief on contributions were reversed instead having tax-free proceeds, this would further reduce the amounts being paid in under auto-enrolment and aggravate the current situation even more.'

Young people could also be deterred from saving into a pension which, he said, is meant to be one of the main objectives auto-enrolment was designed to achieve.

The ONS data also showed that in the private sector, the number of employees who make contributions at rates above the auto-enrolment minimum contribution rates has remained stable.

However, there has been a large increase in the number contributing at rates corresponding to the automatic enrolment current minimum contribution rate.

Private sector employee median contribution rates fell between 2013 and 2014, particularly in the 22 to 29 age band.

First published 23.07.2015

Lindsay.sharman@wilmingtonplc.com