With fewer Britons than ever saving enough money for their old age, a new survey has found that almost a quarter have no idea what their main source of income will be after they have retired.
Figures from Scottish Widows reveal a dramatic deterioration over the last 12 months in the number of people saving adequately for retirement, with the proportion of people putting enough aside for their old age falling from 55 per cent in 2005 to 46 per cent in 2006.
Meanwhile, the proportion failing to make any form of pension saving at all has risen from 17 per cent to 28 per cent, with women, the self-employed and people in debt among the groups least likely to be on track.
What's more, the percentage of people who do not know where their main income in retirement will come from has almost doubled and is now nearly a quarter of the population.
Scottish Widows' Ian Naismith said that the findings provides one of the starkest warnings yet that, as a nation, the UK is simply not saving enough for its old age.
"With this level of under-saving, no-one can be in any doubt about the challenge facing us all when it comes to preparing for retirement," he warned.
The publication in May of the government's plans to reform the state pension system is one reason identified by Naismith for the decline in savings.
"Although it is too early to tell it does appear, regrettably, that the noise surrounding pensions could have led many to put their retirement savings on hold while they wait and see what happens with the much-publicised Government reforms," he said.
While the main thing preventing people from saving is debt, the report also highlights the fact that long standing employees working for large firms are by far the most likely to have adequate pension provision.
Half of those saving adequately fall into this category even though they represent only 43 per cent of those surveyed. And as the report also points out, many of these work in the public sector.
They are also likely to be higher earners. Adequate savers earn £10,000 more per annum (£27,541) on average than the non- saver (£17,719).
In contrast, the self-employed fare badly, with almost four out of 10 (38 per cent) saving nothing for their retirement, compared with 28 per cent overall.
Moreover, while two-thirds of adequate savers are men, a third of women are making no preparation for retirement.
"As we first highlighted in last year's report, certain sections of society will always struggle to save," Naismith said.
"The inability to save is something both the industry and policymakers need to be aware of – many of those currently not saving could simply opt-out of a future National Pension Savings Scheme for many of the same reasons they opt-out today."
The report also reveals a sharp fall in the percentage of people believing that a final-salary scheme (defined benefit) will provide them with most of their income, from 41 per cent (2005) to 35 per cent (2006).
This pessimism will only be deepened by new figures from Aon Consulting that the number of final salary pension schemes open to new members has halved since 2003, with barely more than a quarter (27 per cent) of such schemes still open to new members, compared with 60 per cent in 2003.
And by 2009, Aon estimates, fewer than one in five companies will still let new staff join their defined benefit scheme.
But despite this bleak picture, there appears to be little support for working beyond the state retirement age, with only a third of people surveyed by Scottish Widows saying they would be happy for it to go above 65 (as proposed in the pensions White Paper) to avoid large tax increases.
However, a third of those not saving at all say they would be willing to work beyond 70, suggesting they have a more realistic view about the consequences of not saving.
"It is essential that the decline in retirement savings is halted very soon," Naismith added.
"If people wait until the Government's reforms come into effect in 2012, it will be a case of too little too late. Everyone needs to get onto the savings ladder as soon as possible to start working towards a comfortable retirement."