A third of people with a workplace pension do not know how much their employer is paying into it, while six out of 10 private sector workers don't contribute to their company pension, according to government research.
The Department for Work and Pensions' Attitudes to Pensions survey indicates that thousands of individuals are missing out on employer contributions – effectively extra cash.
Charlotte Harding, a 29-year-old London marketing executive, is one of them. She has been in her job for eight months and knows her employer offers a pension scheme but hasn't joined it.
She said: "I went to a presentation about the company scheme and know I should really join it as I think they would contribute around 3%. My last employer also offered a scheme but I didn't join.
"Retirement always seems like such a long way off that other things take priority, like saving for a car or a house. I don't know much about how pensions work, it all seems so complicated that it puts people my age off. I always told myself I'd start a pension when I turned 30."
She says the government's plan to introduce new rules requiring employers to automatically enrol eligible employees into a qualifying workplace pension scheme and provide a minimum level of contributions from 2012 would prompt her to begin saving.
The new legislation, announced last week, requires small firms that do not offer or pay into a pension scheme to begin making payments. Many are expected to opt to use a new government-run pension scheme, called Nest (National Employment Savings Trust), which promises low costs and charges.
Pensions minister Steve Webb claimed the DWP survey proved the government is right to introduce the new pension rules. "The research confirms that too many people are not saving into a pension – in 2009 nearly 13m jobs had no pension provision. Our reforms will mean up to 8 million people newly saving or saving more with support from their employer, helping to transform people's prospects for retirement."
The level of earnings at which employees will be enrolled is £7,475 and critics argue this threshold will hit women as well as part-time workers and other temporary staff. There are also fears that low-income earners could lose means-tested pension benefits, such as pension credit, because they will be forced to accumulate a small pot of money for retirement.
Tom McPhail, head of pensions research at Hargreaves Lansdown, said the new rules were broadly positive: "Potential investors need a nudge to get them to the right outcome – left to their own devices, many people might undermine their own retirement savings plans. Auto-enrolment addresses these problems by making membership of a pension the default solution."
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