The occupational pension scheme crisis began 40 years ago when membership peaked, according to a report by Policy Exchange.
The report by the think tank shows the number of men enrolled in the schemes halved between 1967 and 2006 from 9.9m members.
The number of female members rose from 2.3m to 5.5m but total membership dropped from 12.2m to 9.5m.
Nicholas Hillman, the report’s author, says over-regulation, rising longevity and extra costs have conspired to produce the perfect storm in pensions.
He says: “Quelling the storm will need three changes. First, we need braver deregulation for private occupational pensions, as well as lower costs for public sector schemes.
"Secondly, instead of spending four years designing an entirely new system of personal accounts, employees should be automatically enrolled into existing products, such as stakeholder pensions.
"Thirdly, we should recognise that earnings-related state pensions do not work. A single tier state pension would be much more comprehensible than the current basic state pension and state second pension."
Membership to defined benefit (DB) schemes includes just 15% of private sector employees and only 24% of UK employees have a private pension as their main addition to the basic state pension, down from 39% in 1991 to 1992.
The report also shows contributions to group personal pensions equal a third of those for final salary schemes. Meanwhile, public sector pensions will grow in size and cost as the annual charge to the taxpayer looks set to rise from 1.5% of GDP to more than 2% by the 2030s.
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