Pension pot
But the insurer warned that there is still a n awareness gap among younger workers about early saving.(Reuters)

The UK government's auto-enrolment scheme has significantly increased the number of low paid workers adequately saving for retirement, according to insurance firm Scottish Widows.

The flagship pension reform, which means employers must enrol workers into an occupational pension scheme between 2012 and 2017, increased the number of people on incomes between £10,000 ($16,188, €12,513) and £30,000 adequately saving for retirement to 50%, up from 34% in 2012.

But the Scottish Widows Workplace Pensions Report, which questioned 5,200 people, also revealed that there is still an awareness gap among younger workers about the importance of saving early for retirement.

The study found that just over a fifth (21%) of 22 to 29 year olds and less than a third (32%) of 30 to 49 year olds agreed that the age to start saving for later life is 25 or younger.

"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," said Lynn Graves, head of business development, corporate pensions at Scottish Widows.

"Our calculations have shown the huge impact that starting to save earlier can have on your retirement income, so it is essential that people understand the bigger picture when it comes to planning for retirement."

Scottish Widows calculations showed that although most people do not think about saving for retirement until their 30s, starting to save five years earlier could add almost a fifth in retirement income, or £725 annually.

In addition, starting to save 10 years earlier could add an extra £1,500 to annual income in retirement.

Scottish Widows calculated that although most people do not think about saving for retirement until their 30s, starting to save five years earlier could add almost a fifth in retirement income, or £725 annually.

The insurer also said that starting to save 10 years earlier could add an extra £1,500 to annual income in retirement.

The study also found that there is still a small proportion of people who do not feel able to take advantage of auto-enrolment.

For example, 3% of respondents who were auto-enrolled this year have opted out, with the top reasons cited including a lack of money (29%).