Research of more than 5,200 UK employees by the insurance company has revealed the amount people are prepared to save is below what is needed to meet their retirement aspirations, with the average sum falling from £67 per month last year to just £51 in 2013.
The Workplace Pensions report analysed employees waiting to be auto-enrolled found the average worker would like an annual pension income of £25,200.
However, the actual average income retirees can expect, based on what they are willing to contribute, is just £13,900, leaving them short by £669 every month.
Lynn Graves, head of business development, corporate pensions at Scottish Widows, said: "We cannot ignore the fundamental correlation between poor employee awareness of the scheme and the lack of understanding of the realities of retirement.
"The alarming fall in the amount that employees are willing to contribute only serves to highlight this."
The report showed awareness of auto-enrolment has increased from just over a third (39%) of workers in 2012 to almost two-thirds (65%) in 2013, but found there are still significant gaps in people's knowledge.
More than a quarter (28%) of those who have been auto-enrolled are unaware of how much they contribute, and 44% of employees paying into their workplace pension scheme do not know how much their employer is contributing.
The report found awareness is poor among those the scheme is mainly targeted at, with 21% of employees on an annual income of under £30,000 still not aware of the changes.
"The pensions industry, Government and employers have to educate the UK workforce about the importance of saving adequately for retirement, and how their workplace pension scheme can help them to be comfortable in old age," Graves said.