The UK is at a pension crossroads which could leave businesses facing a massive bill in the future.
If employers fail to act soon, they will be hit by a huge financial burden within the next three decades, academics from the London School of Economics warn in a new report.
"Our research found that a clear system of communication and open dialogue significantly increases employee engagement levels with a workplace pension and improves staff contribution levels above 4%," said Dr Sandy Pepper, the author of the report and professor of management practice at the LSE.
"Without effective communication around auto-enrolment there is a fundamental risk that people will not recognise the importance and value of pension contributions."
Auto-enrolment began last year and continues in a phased roll-out until 2016. Under the changed system the Government set a new 1% contribution baseline for pensions.
But the report points out that the level is in stark contrast to the current mandatory 9% contribution businesses in Australia pay into employee pensions.