Fewer than half (44 per cent) of employers have paid for advice when setting up an automatic enrolment scheme, Government data shows.
The Department for Work and Pensions annual survey found the median average cost of complying with auto-enrolment was £1,000, rising to £4,000 for employers who had paid for advice and dropping to nothing for those that did not.
In addition, the DWP says almost two-thirds (63 per cent) of firms who have already staged are only contributing 1 per cent, the legal minimum.
Of employers that are phasing in contributions, 85 per cent are planning to contribute the minimum – which reaches 3 per cent for employers in 2019.
Of those firms yet to stage, just over one in ten (14 per cent) expect to contribute above 3 per cent.
The report also reveals the majority (79 per cent) of employers who have staged so far and already offered a pension have stuck with their existing provider.
However, firms providing pensions for the first time were most likely (40 per cent) to have used Government-backed scheme Nest.
Half of staged employers used the regulator’s postponement option, with the majority taking the maximum of three months.
The survey covered around 3,000 private sector firms who employ 1.8 million people in all.
Royal London director of policy Steve Webb says: “The most worrying finding is that around three firms in five, 62 per cent, that have started the process of automatic enrolment are only contributing at the legal minimum of 1 per cent of qualifying earnings.
“Whilst it is great that membership of schemes is shooting up, it remains the case that for many workers, only tiny amounts of money are going in, and this is before we get to the smallest firms who seem most likely to contribute at minimum levels.
“Unless we can get workplace pension contributions up quickly to a more realistic level, we risk facing a generation of workers who simply cannot afford to retire.”