One in five people approaching retirement do not expect their current pension to generate them any income once they stop working - and are instead relying on their cash savings.
Figures from Baring Asset Management reveal that workers are placing little faith in their pension savings to provide them with a retirement income. British adults estimate that only half of their retirement income will be funded by a private or workplace pension, with the remainder derived from cash savings and property.
While pension scandals such as the losses scheme members faced by Equitable Life have sullied the waters, workers should be putting more faith - and money, into a tax efficient pension plan.
Even a cash ISA, in which savers are not charged income tax on an interest rate cannot compete with equity returns offered in a private or workplace pension.
Bank of England base interest rate has been at a record low of 0.5% for four and a half years - meaning an instant access cash account is paying an interest rate of just 1.2%.
With the official measure of inflation at 2.8%, this means savers are failing to get a positive rate of return and instead will see their cash eroded in value.
Even a cautiously managed portfolio aims to match inflation. Pension schemes also benefit from contributions from both the Government, in the form of a tax rebate, and an employer, which cash savings do not.
Marino Valensise, chief investment officer at Barings, said that the tax benefits of pensions and the ability for employers to make contributions into them meant that pensions are the best way to save for retirement.
"It is surprising that people do not expect a higher percentage of their retirement income to come from this source, and also a little alarming that the younger generation seem less convinced by them," he said.
Mr Valensise said that auto-enrolment, the opt-out work place pension scheme, should help rectify these figures.
“Hopefully the current auto-enrolment programme where the vast majority of people are automatically being enrolled into their company pension schemes and receiving contributions from their employers will help address this,” he said.
