Fewer young people than ever care about their pensions, new research suggests - but they should be very concerned indeed.

Only a fifth of people under 34 are concerned about their future retirement income, a survey by Mercer Human Resource Consulting found.

Those aged between 34 and 44 are more worried - but even so, only 25% are concerned about what they will live on when they stop working.

Many are confused by the increasing complexity of financial choices Dr Patrick Gilbert, Mercer

This is despite warnings that people are currently saving �27 billion a year too little towards retirement.

Nearly three-quarters of employees think their pensions are very good - even though nearly half of the biggest companies on the stock market have closed their lucrative final salary schemes.

Dr Patrick Gilbert, head of organised research and effectiveness at Mercer, said: "I suspect that many employees are in a state of denial.

"It makes them nervous to think that they could face financial difficulties in retirement and many are confused by the increasing complexity of financial choices they have to make."

The number of firms closing their final salary pension scheme has doubled in the past year.

The head of Hermes Pension Fund, Tony Watson, believes more firms will follow suit.

"My estimate is that in five years time, three-quarters of all the defined benefit [final salary] pension schemes will have closed, at least to new entrants, and possibly to new contributions as well."

Green Paper

Research also published on Saturday by Age Concern found that 86% of people thought improving the basic state pension was the key to solving the pensions crisis.

The charity said the basic state pension, which is currently worth 15% of men's average earnings, is expected to be worth just 7% by 2050.

It also called on the government to look at ways to simplify pensions when it publishes its Pensions Green Paper next week.

Its survey found that 59% of people said they would save more or start a pension if these were easier to understand.

Just under 40% said encouragement from their employer would persuade them to do more towards making provisions for their retirement.

Mercer's research was based on responses from 3,500 working adults in a mail-in survey in July and August. ICM questioned 1,001 people by telephone between 6 and 8 December for Age Concern.