More and more workers face a pensions timebomb, with a fifth of people saving nothing for retirement – and those that do save facing life after work on less than half what they believe they will need.
Only 45 per cent of 5,000 people aged 30 or over surveyed by Scottish Widows were found to be making adequate provision, a new low since research started in 2005.
The report blamed a "triple whammy" of the uncertain economy and stagnant wages, combined with people carrying debts later into life as well as living for longer.
Recent retirees have seen incomes plummet as annuity rates – which set the return on the pension pot – have fallen, and the new figures may see another generation face increasing hardship upon retirement.
A retirement savings gender gap is also on the increase, with only 40 per cent of women putting enough by compared with 49 per cent of men. The increased gulf has come from a drop in the proportion of women who were preparing adequately, from 42 per cent last year.
One-fifth of men and women combined were saving nothing at all for their old age and more than a third were "under-saving".
People were seen as preparing adequately if they were saving at least 12 per cent of their income or expecting their main retirement pot to come from a "gold plated" defined benefit pension which offers a guaranteed level of income such as a final salary pension.
Those saving less could still build a "worthwhile" income but they were likely to see their living standards drop sharply after retirement.
Someone retiring aged in their mid-60s faced receiving less than half the amount of money they would feel comfortable living on in their old age, the report found.
The typical level of income people felt they would need in retirement was £25,200. But based on what pension savers were putting away, the report estimated they were more likely to end up living on around £11,400 a year, including their private and state pension.
The proportion of people saving enough for their pension has generally been on a downward slide since a peak of 54 per cent of people who were saving enough in 2009, according to the annual report. It also found that a quarter of over-50s still had a mortgage – with a similar proportion using a credit card – while a third of retirees had left work with debts still owing. Of the over-50s, one in 12 were had a non-mortgage loan.
Ian Naismith, a pensions expert at Scottish Widows, said: "People are now less prepared for retirement than at the height of the downturn a few years ago, yet expectations for income in retirement are still increasing.
"As a nation we must either prioritise saving for the future and prepare accordingly, or seriously adjust our outlook for old age."
The findings come as the Government's landmark scheme to automatically place people into workplace pensions continues to try and tackle the savings crisis.
Automatic enrolment began last autumn with larger firms, and up to 11 million people will be newly saving or saving more as the scheme rolls out over the next five years.
Further reforms, including introducing a simpler flat-rate state pension, are also in the pipeline as part of Government and industry plans to make saving more attractive, fairer and easier to understand.
But Scottish Widows said that a general decline in people relying on a DB pension to give them a decent retirement income was not being compensated for by people making adequate contributions into defined contribution (DC) pension schemes.
Many firms have closed their DB to new members as they tend to be more expensive to run and they have been replaced by DC schemes, which transfer greater responsibility for the size of the eventual pension income onto the employee.
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