Britain's pension crisis deepened further last year despite a series of attempts to encourage workers to save more and a marked recovery in stock market fortunes, according to official figures.
Analysis of little-noticed government data shows that a nine-year trend of falling pension provision worsened in 2005 despite continued warnings that Britons are failing to save for old age.
Almost 12 million workers, more than two-fifths of the working population, failed to make a penny of pension savings in 2005, according to new figures released last week by the Office of National Statistics (ONS).
But a study by The Independent of ONS reports, known as the annual survey of hours and earnings, shows that last year was simply the latest in a marked trend to lower pension provision.
The ONS figures reveal that the number of people not making any pension provision at all has risen by more than 13 per cent since 1997, with an increase in non-savers in every year except one. Over the same period, the number of people in work has risen by just 8 per cent.
The analysis also reveals the people most likely not to be making any pension provision at all are those who most need to do so - and that the crisis is continuing to worsen.
The ONS figures indicate that between 1997 and 2005 there was a 45 per cent increase in the number of workers aged between 55 and 64 not saving for old age. The increase was higher than for any other age group, even though older workers have less time than younger colleagues to remedy shortfalls in their pension savings.
In addition, last year alone, the total number of people across all working ages not making pension provision rose by almost 250,000, following a 600,000 increase in the previous year.
Three years ago the Association of British Insurers (ABI) warned Britons were falling £27bn a year short of the amount needed to finance a comfortable old age. Government initiatives such as the launch of stakeholder pension plans in 2001, intended to simplify saving, have failed to reverse the decline.
Helen McCarthy, head of pensions and savings development at the Association of British Insurers, said: "As people spend more and build up more debt it's not surprising, though still alarming, that levels of saving are falling."
Kay Carberry, assistant general secretary of the Trades Union Congress, said the figures were so bad that the pension reforms unveiled by the Government earlier this year would, in isolation, not be sufficient to reverse the trend. "People have lost trust in the pension industry because there has been a series of mis-selling scandals and employees have watched their employers withdrawing from occupational pension provision," Ms Carberry said.
Joanne Segars, director of policy at the National Association of Pension Funds, warned that plans to launch a new national pension scheme might hinder attempts to reverse the trend. "If we want to increase the amount of money saved as well as the number of savers, the Government needs to make sure that the new accounts do not add to pressure on the superior pension schemes that already exist."
The Department for Work and Pensions said the Government had already taken steps to halve the number of pensioners on low incomes to a million and had proposed "bold reforms" to the pension system in its White Paper earlier this year.
James Purnell, the pensions reform minister, said: "Our reforms will make the State Pension more generous by linking it to earnings, and will make it easier for people to save by automatically enrolling up to 10 million employees into a system of low-cost personal accounts.
"There are also up to 4.5 million people who could be taking advantage of contributory pension schemes their employers provide, but are currently not doing so.
"We are committed to support and strengthen good occupational pension provision - in the White Paper we announced a deregulatory review to reduce bureaucracy and cost for people running schemes."