A new survey from management consultant, Towers Perrin carried out by MORI reveals that employees are blissfully ignorant when it comes to their financial future. Almost 90% of respondents expect at least a secure and stable retirement, which most respondents define as having at minimum 50% of their current income level as a pension. But the report shows that fewer than half are making any additional retirement savings. Without this top up, few, if any of those surveyed will hit this target.

These are some of the key findings from the new research, which asked a 1005 company pension holders, employees of large companies with over 1000 employees about pension provision and their expectations.

Although 84% felt that they understood their options under their pension scheme at least fairly well, 41% no idea what their employer was contributing to their plan. Over a quarter were unsure of the minimum contribution required for their company scheme.

Perhaps even more worryingly almost 30% of respondents felt that they had no need to worry about their personal retirement provision as they would have the State pension to fall back on.

Robert Ivey, Head of the Financial Planning Group at Towers Perrin said: "Our research demonstrates just how complacent people are about saving for retirement. The inexorable move from final salary related pensions to defined contribution plans means a much lower entitlement for most people. Unless employees wake up to the realities and start making some serious additional savings, they are likely to end up with less than half what they think is necessary and a very shock when they reach retirement."

The survey reveals that people expect their employer to do much more than make contributions. Over three-quarters (78%) of respondents felt that their employer had a responsibility to help with their retirement planning. 78% said they would find it useful if their employer provided access to an IFA and almost half (41%) said that they would have more confidence in an IFA appointed by their employer.

The Rt Hon Frank Field, a well known commentator on the issue of pension reform said: "This new data makes clear the need for urgent action from the Government to help occupational pension schemes - the welfare success story of the last century. The Government's simplification review must produce results.People want to know that they have a decent minimum income in retirement above which they can make their own provision. A far-sighted Government would set out policies that would allow everyone ending a working life a retirement free from means tested benefits. Without real reform the coming decades will see ever more pensioners drawing means tested benefits."

The survey also shows that the level of ignorance of the new Stakeholder pension would appear to be higher among the very people for whom it was designed, those earning between £15,000 - £19,999. Almost half (49%) of respondents had never heard of Stakeholder, only a slight improvement on the 55% who knew nothing of Stakeholder when the survey was last conducted in 2000.

Meanwhile, the government has launched a review aimed at bringing the annuity market up to date and giving pensioners a wider choice, better information and more control.

Ruth Kelly, the Economic Secretary to the Treasury and Alistair Darling, the Secretary of State for Work and Pensions issued the joint document setting out the Government's proposals to modernise pension annuities. Ruth Kelly said: "Annuities remain the right way of turning capital into income in retiremement. But there is room for improvement. We want everyone to be able to buy products which meet their individual needs and provide good value for money. Today's proposals will provide more flexibility to innovate and to offer products that will meet the needs of the growing number of people who will need to purchase an annuity in the future. The proposals tackle the key issue that faces everyone - getting the best possible value from pension savings. "It is time to bring the annuity market up to date and improve competition within it. We want people to have choice, flexibility, transparency and control. Better informed customers can make better choices."

Mr Darling added: "The Government wants all pension savers to achieve better value and make suitable choices when they use an annuity to ensure they have a secure income throughout their retirement. The options discussed in the consultation document are designed to achieve this. It looks at ways of making the annuities market work more effectively, helping everyone buy products that meet their needs and achieve good value. Reform is necessary to make the annuities market work better, so that consumers are better informed and able to choose annuities that provide good value. Providers also need greater flexibility to provide a wider range of products".

In evaluating any new annuity options the Government is determined that any action:

• Should increase the level of retirement income that people can expect to gain through an annuity.
• Should ensure that funds saved with the benefit of tax relief are used to provide a secure income in retirement. Pension savings should not become a tax favoured savings vehicle for non-pension purposes; nor should people be enabled to use their funds other than for retirement income, risking their needing additional support from other taxpayers through the social security system.
• Contributes to the Government's aim of encouraging people to save more for their own retirements. The Government is keen that people should understand annuitisation and the options on offer so that they make the right choices and receive good value.

The Government will take legal powers that will enable a wider range of annuities to be used as the market develops. New products that arise through the consultation process and which satisfy the Government's principles will be able to be introduced quickly and easily.