In a development that will add to worries of a national pensions and savings crisis, official research shows that the proportion of working adults making no provision for retirement rose to 45 per cent in 2003-04.

These 12.7 million people are liable to be entirely dependent on the minimal state pension and on a welfare benefits system that is likely to be increasingly strained when they reach retirement age.

The number of people in this category has climbed rapidly under the present Government, from 40 per cent of working adults, or 10.6 million people, as recently as 1998-99.

The figures, in the 220-page Family Resources Survey published by the Department for Work and Pensions (DWP), have been highlighted by David Willetts, the Shadow Work and Pensions Secretary. They are certain to fuel election clashes over the pensions crisis between the Conservatives and Labour.

Other data from the survey, published last week, revealed that almost 100,000 fewer people who retire every year benefit from a company pension than when Labour took office. Mr Willetts said that the research showed the pensions crisis was getting “worse by the day”.

“These figure show the proportion of workers with no pension at all has risen by 5 per cent under Labour — amounting to a massive 2.1 million workers,” Mr Willetts said. “This comes just days after the DWP admitted that 80,000 people lost their pensions when their companies went bust. And we haven’t seen the worst of it.”

Mr Willetts said that the pensions crisis was poised to drive millions of people on to means-tested benefits, but added that the Conservatives aimed to take action to boost savings.

The choice at the general election was between “insecurity in old age under Labour or dignity and security in retirement under the Conservatives”, he said.

This week’s Labour election manifesto is not expected to contain detailed ideas on pensions as the Government’s proposals on the issue will be shaped by recommendations from the Pensions Commission under Adair Turner that are not due to emerge until after polling day.

The CBI said that the steep decline in saving for retirement had been worsened by changes to rules on valuing pensions funds and by a series of financial scandals. But the employers’ organisation argued that part of the blame lay with the Chancellor, Gordon Brown, through the impact on pension funds of his abolition of dividend tax credits worth £5 billion a year.

The CBI estimates that 13 million people face having to save more or work longer to achieve a comfortable retirement.

Chris Kenny, head of life and pensions at the Association of British Insurers, said that the challenge for the next government would be to “turn words into positive action”. He said that measures should be taken to encourage employers to help staff to save through their employment.