A commission set up by the National Association of Pension Funds uncovered "widespread concern" about the charges, risks and complexity of the pensions of 23 million workers.
The Workplace Retirement Income Commission said workers must get a better deal from their pensions if they are to save enough for their retirement.
Lord McFall of Alcluith, who chaired the commission, said the spotlight for reform had rightly fallen on public sector pensions, but he added there were "critical problems" in private firms as well.
"Too many people are stuck in a complex, costly and inefficient system that relegates the consumer's interest to second place. On top of that, they simply aren't saving enough to secure a decent retirement.
"People need to get more bang for their buck, or they're not going to bother with a pension. Instead they'll end up spending today, ignoring tomorrow, and scraping by in poverty on the state pension. We cannot stand by and let that happen. The complacency of many in the pensions industry is alarming," said Lord McFall, former chairman of the Treasury Select Committee.
The commission said fee structures were too "opaque" and too many people were being short-changed by their annuity choice.
Workers in defined contribution pensions were being left to carry all the risk of funding their retirement and were often "at the mercy" of stock markets, said the report.
Trust in pensions was low, said the report, calling for a permanent, independent commission to be established to take the politics out of pensions.
Lord McFall added: "Sadly, millions of people are being left to navigate a pensions minefield that would puzzle Einstein. We're seeing less saving and lower trust in pensions, and that's a vicious cycle that cannot continue.
"Auto-enrolment will help, but it's a halfway point, not the final answer. More needs to be done. We hope this report will be a catalyst for discussion about the bigger picture.
"There's no point in bringing people into pensions that will erode their savings through high fees. The Government should set a clear ceiling on the charges that will be allowed under auto-enrolment.
"Annuities stand out as an area sorely in need of a shake-up. People are being short-changed by the current system, and it's unfair that a miscalculation can haunt them financially for decades."
Around 14 million workers are not saving into a workplace pension, although 10 million are due to start being automatically enrolled into one from next year.
Neil Carberry, the CBI's director for employment, said: "This report rightly identifies the need to do more to boost savings for retirement, and makes some helpful recommendations about how to build a culture of saving in the UK.
"However, the commission's proposal to consider increasing the minimum compulsory pension contribution in 2017 is not the right answer. The current plan, to introduce a floor of 8% saving from next year, remains the best way to ensure more people who can afford to save do so."
A DWP spokesperson said: "Ensuring the private pensions sector is fit for purpose is a priority for the Government, especially in the run up to automatic enrolment. So we welcome all contributions to this debate.
"We have already taken significant steps to reforming the system. We are consulting on simplifying the State Pension to provide a clear foundation for saving and people will start to be automatically enrolled into a workplace pension from October 2012, helping millions to save for the first time.
"We are working closely with the pensions industry on many of the issues raised in the report, for instance we'll be bringing forward proposals on addressing small pots, short service refunds and transfers in the Autumn."
Maggie Craig, director of life and savings at the Association of British Insurers, said: "Next year automatic enrolment will see millions more people starting to save into a pension.
"We should all be focused on the future, getting reforms already agreed right and kick-starting a savings culture in the UK.
"Unfortunately this report focuses on the past, saying nothing that hasn't already been said before. The issues it raises should not be dismissed but are already on the agenda and being actively addressed.
"The shift to the new pensions world is already under way and it's time to look forward rather than back."
PA
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