The proportion of people in a workplace pension has fallen below half for the first time in at least 15 years, prompting calls for confidence in schemes to be rebuilt.
A "worrying landmark" of 48% of employees are in a scheme, compared with 55% when the records began in 1997, Office for National Statistics figures showed.
Just a third of private company workers are in a pension, down from 47% 10 years ago, compared with an 83% membership rate for public sector employees.
However, participation in schemes should be approaching its "nadir", analysts said, with automatic enrolment beginning this autumn to tackle the pension savings crisis.
Darren Philp, policy director of the National Association of Pension Funds (NAPF), said the weak economy and falling confidence in financial products have spurred many private sector workers to quit pensions altogether.
He said: "We've passed an important and worrying landmark.
"Less than half the workforce is now saving into a pension, and with people living longer the UK is facing a growing headache in paying for its old age."
He said the private sector has seen a "seismic shift" in pensions, with many final salary deals being pulled in the last decade.
Young workers are less likely to be in an occupational scheme than those in their 40s and 50s, the official research found.
Men working in private firms are more likely to be in a scheme, while among part--time staff, a higher proportion of women had a workplace pension.
Mr Philp said: "More needs to be done. We must all work to provide pensions that people have the confidence to save in.
"This means rebuilding trust and confidence in the pension brand, and demonstrating what value people can achieve by saving in a pension."
John Ball, head of UK pensions at Towers Watson, said: "Pension participation has been getting worse for some time, but we should now be approaching the nadir."
Auto enrolment would be a "game changer", he said, but an important issue would be whether workers automatically placed in schemes will value their pensions as much as those who actively joined up.
He said: "Companies will want to avoid spending money on benefits that employees do not value. Some will want to communicate how much better than the minimum level their pension is.
"Others may automatically enrol staff at lower contribution rates and give them the option to trade up."
Just 9% of private sector employers were building up new defined benefit pension entitlements in 2011, down from 34% in 1997.
By contrast, 79% of public sector employees were active members of defined benefit schemes in 2011.
Mr Ball said: "The number of private sector employees in defined benefit schemes has been in freefall and will drop further before it levels off."
TUC general secretary Brendan Barber commented: "Decades of falling pension provision now mean that less than half the workforce are saving into an employer-backed scheme.
"This mass retreat from occupational pensions will leave millions in poverty and put a huge strain on the public finances.
"Today's figures also underline the importance of auto enrolment into pension schemes. Ministers should rebuff any more attempts from business lobbyists to water it down."
Pensions Minister Steve Webb said: "These figures lay bare the scale of the challenge we are facing. With only 33% of people working in the private sector saving in a workplace pension, we must take action to prevent a pension crisis."
Michelle Mitchell, charity director-general of Age UK, said: "Today's figures underline the importance of automatic enrolment, which will for the first time give all employees earning above a certain amount the chance to save in a workplace pension with a contribution from their employer.
"The scheme is due to start this October for larger employers but has already been delayed for small and medium employers.
"The timetable must not be allowed to slip further if the Government is to protect millions of people from slipping into poverty in retirement."