Half of UK employees on lower incomes are saving enough for retirement compared to 34% in 2012, according to research by Scottish Widows.
Its annual Workplace pensions report, which surveyed 5,200 employees, found that those earning between £10,000 and £30,000 a year are now saving adequately for retirement since the introduction of auto-enrolment.
The number of people aged 30 to 49 saving adequately for retirement has also risen, with 49% now doing so compared to 42% in 2013.
The research also found that there is an awareness gap among younger employees about the importance of saving early for retirement. A fifth (21%) of 22 to 29-year-olds and less than a third (32%) of 30 to 49-year-olds agree that 25 is the age to start saving.
Of those that have opted out of auto-enrolment this year, 29% cited a lack of money as the reason for doing so.
Employees in their 20s (6%) and those with four or more dependent children (7%) were the most likely to opt out.
Lynn Graves (pictured), head of business development, corporate pensions at Scottish Widows, said: “Auto-enrolment is designed to help shore up the financial futures of groups that may not be in such a strong position to prepare adequately for retirement on their own, particularly lower-income groups and younger people who are yet to establish the savings habit.
“In this respect, this year’s results are extremely encouraging as the reform is more widely understood and welcomed by these groups as it rolls out to a wider cohort of employees.
“Our research shows that 77% of people are now aware of the scheme, rising from 39% in 2012 and 65% in 2013, and that 65% of the UK population is positive about the effect of auto-enrolment.
“While these findings are encouraging, there is still some work to be done to ensure that the message is getting through about the importance of starting to save as soon as possible.
“Our calculations have shown the huge impact that starting to save earlier can have on retirement income, so it is essential that people understand the bigger picture when it comes to planning for retirement.
“The introduction of auto-enrolment, alongside the reforms to retirement planning announced in the Budget, have created a unique opportunity to engage employees and educate around pensions.
“It is a crucial moment for the industry and government to work together and focus its collective efforts to ensure that auto-enrolment is the success it deserves to be.”