UK occupational pension schemes may have a collective deficit of between £300bn and £400bn, according to the Pensions Regulator.
Eroded pension funds have fuelled anger and resentment in the UK
It warns that between 150 and 300 large occupational pension schemes are at risk and being actively investigated.
Their problems may be large deficits, threats to company solvency, or poorly-performing trustees.
The warnings are contained in the first strategy report published since the Regulator was established a year ago.
Speaking on BBC Radio 4, Charles Massey, of the Pensions Regulator, said: "There are between 150 and 300 schemes where we want to have active intervention.
There might be governance concerns around the trustees. We may also be looking at these schemes because of the underlying health of the sponsoring employer."
Poor quality pension trustees
The Regulator was established in April 2005 to protect the benefits of occupational pension schemes and to make sure they are better run.
Private company pension schemes
17.3 million members
85% of members are in just 1,600 schemes
Each of these big schemes has at least 1,000 members
300 of these are defined contribution (money purchase)
In its medium-term strategy report, it said it had serious concerns about the level of pension trustees' "knowledge and understanding", particularly those looking after funds with under 1,000 members.
"Our experience is that the standard of governance of many schemes, particularly smaller ones, is poor."
The report gives three alarming examples of badly-run small schemes where the trustees were either dominated by the employer or had failed to do their job to ensure that deficits were made good.
- In a scheme with 50 members, the employer claimed it could not make good a deficit of £300,000 despite giving shareholders a special dividend of £400,000. The actuary had to blow the whistle because the managing director, who was also the company's major shareholder as well as a trustee, was not acting in the best interests of the scheme members.
- In a scheme with 25 members, the employer was the sole trustee and the managing director of the company was the majority shareholder. The MD had ignored his responsibilities and had let the scheme become severely under funded. The scheme auditor had been reported to his professional body for not blowing the whistle.
- In a scheme with 100 members, the board of trustees had not taken steps to secure extra contributions to reduce the level of under funding, thus letting the scheme stay severely under funded.
The Regulator said that its priorities for the next few years would be to ensure that employers funded their schemes more fully, that trustees were properly trained to do their jobs, and that workers understood the risks of defined-contribution (also known as money purchase) schemes, which are a growing form of retirement saving.
The report argues that only a substantial increase in funding will erode pension scheme deficits.
And it warns that even if future improvements in the returns on shares and bonds turn out to be beneficial for pension schemes, their effects will probably be offset by the increased longevity of scheme members.