The number of people putting money into a workplace pension scheme dropped for the third year in a row in 2011 according to latest figures from the Office for National Statistics.
The number of active members of workplace pension schemes dropped from 8.3million in 2010 to 8.2million, with private sector pension schemes seeing the largest drop in active members.
According to the ONS just 2.9 million workers were contributing into a private sector workplace pension scheme in 2011, compared to the 5.9 million who were contributing to such schemes in 2000.
The drop in active membership of private pension schemes was blamed on a decline in the number of defined benefit pension schemes offered by employers in recent years.
The figures come less than two weeks before the launch of auto-enrolment, which by 2017 will see all companies obliged to automatically enrol eligible workers into a suitable pension scheme and offer a minimum level of contributions. Though workers will be able to opt out, it is hope that the policy will encourage more people to save for retirement.
Stan Russell, from Prudential, said:
"This data shows the urgent need for auto-enrolment, with fewer than a third of people with a company pension scheme actively contributing. Our own research suggests that only one in five workers always joins their company pension scheme - resulting in them missing out on tax relief to the tune of £200 per year. If you also consider the losses in employer contributions, it would not be unfair to double this figure for each individual.
"We hope that auto-enrolment's high profile launch will highlight amongst the public the importance of retirement saving and reverse the trend we've seen over the last few years of falling incomes for pensioners entering retirement."