This year will see more and more smaller UK companies begin to ‘stage’ – meet their legal deadline for offering a workplace pension – and as a result millions of employees will be required to start contributing to a pension for the first time.

But, according to new research more than a quarter of UK employees not yet paying into a pension are worried that being forced to contribute to one will put extra pressure on their finances.

Partly, this is because many people without a pension have no real idea what auto-enrolment will cost them; the study finds that almost half of employees not currently paying into a pension do not know how the new workplace pension will impact their pay packets.

Further underlining the lack of understanding surrounding auto-enrolment, 43 per cent of survey respondents are not aware they could opt out of the workplace pension. More worryingly for the government, 15 per cent say they intend to opt out immediately while more than half say their contribution level will determine if they opt out or not.

Catherine Pinkney, co-founder of Paycircle, who commissioned the research, says that, to date, the government’s focus has been on getting business owners to embrace the workplace pension, but while auto-enrolment is a big deal for today’s smaller businesses, it’s an even bigger deal for their employees, half of whom are still in the dark about how it will affect their take-home pay.

‘Another worry is that, while people need to save for their futures, should they do so if it puts significant strain on their finances today? Auto-enrolment is a fantastic idea in principle, but what its effects will be in practice we are yet to find out,’ she adds.