A pensions ‘crisis point’ in less than two decades will see 2.7 million people retiring with less saved up than they need, analysis suggests.

Research found 59 per cent of ‘defined contribution’ (DC) savers - with pensions based on what they put in rather than gold-plated ‘defined benefit’ (DB) schemes - would fall short by the 2040s.

They form part of a ‘lost generation’, currently in middle age, who have missed out on the generous DB schemes that were more widely available in the past.

At the same time they will also not have benefited from a lifetime of auto-enrolment into retirement funds, a system that was brought in years after they started work.

‘The years 2040 to 2044 represent a critical period when the highest number of undersavers will enter retirement,’ according to the analysis from savings and retirement group Phoenix.

The problems will start over the next five years with the majority of DC savers ending their working careers with less income than they need or expect, before building to a ‘crisis point’ in the 2040s.

Analysis shows that those affected in 2040-2044 will predominantly be born in the 1970s, female, working full time and earning below £80,000 - about half of them on less than £20,000 - and expecting to retire between the ages of 66 and 70.

It adds to the warnings from many in the wider industry that workers are not saving enough for their retirement and could be further discouraged if - as feared - Chancellor Rachel Reeves stages a raid on pensions savings in her Budget later this month.

Patrick Thomson, head of research analysis and policy at Phoenix Insights, said: ‘The analysis paints a bleak picture of future retirement incomes.

‘We are already reaching the stage where the majority of people with a defined contribution pension will enter retirement with either less than they expect, or less than they need in terms of a minimum living standard.

‘This situation is set to worsen over time and peak in the next 20 years.

‘There is an urgent need to address undersaving to better support people achieve financial security later in life.’

Mr Thomson said to address the problem, ministers should consider increasing minimum auto-enrolment contribution rates and policies to make it easier for over-60s to work ‘so people can continue to earn and save later in life’.

‘The plight of retirement incomes is clear to see, but we have a golden opportunity to take meaningful action to turn the tide in undersaving and improve the retirement prospects of future generations,’ he added.

‘These really aren’t tomorrow’s problems anymore.’