The study by the Pension Provision Group also urges younger people to plan more effectively for old age, as the state pension will decline in value.

The Social Security secretary, Harriet Harman, who unveiled the findings, said: "The report sounds a clear warning that many people now working, perhaps in their thirties or forties, face a big drop in their income when they come to retire."

By 2025, the report said, more people will see a bigger drop in their pensions, and the gap between richer and poorer pensioners will increase.

'A role for the state'

The Pension Provision Group was set up last summer as part of the government's wider Pensions Review, to analyse independently current and future patterns for pensions.

The group was is headed by Tom Ross, Vice-Chairman of the National Association of Pension Funds, and includes representatives of the TUC, the pensions industry and academics.

The government's plans for future pension provision include "stakeholder" pensions, to provide second-tier pensions to supplement the basic state pension for those who could not afford more expensive schemes.

Stakeholder pensions will be designed to encourage long-term saving, by offering low-cost, simple pension plans. They will be primarily available to adults who do not have access to company pension schemes.

Ms Harman said: "The report reinforces our view that there is a role for the state in partnership with the individual."