The estimates are valid and will be required as-is during the iteration planning meetings. Underestimating now will cause problems later. Instead negotiate an acceptable release plan. Negotiate until the developers, customers, and managers can all agree to the release plan. Scope is how much is to be done.
Resources are how many people are available.
Time is when the project or release will be done. And quality is how good the software will be and how well tested it will be. Management can only choose 3 of the 4 project variables to dictate, development always gets the remaining variable. Note that lowering quality less than excellent has unforeseen impact on the other 3. In essence there are only 3 variables that you actually want to change.