Millions of people across Britain are facing a “cliff edge” when they retire due to a chronic shortfall in saving that will require a radical shake-up of the pensions system to fix, a government-backed report has warned.

The Pensions Commission said 15 million people were currently not saving adequately for their retirement, and warned this could rise to as many as 19 million without action.

Sounding the alarm over the risks to individuals and the economy at large, the independent group of experts said there was a danger that tomorrow’s retirees would be worse off than today’s.

First established under Tony Blair’s government in 2002, the Pensions Commission was revived by Keir Starmer last year amid fears over a burgeoning crisis for the economy, public finances, and the welfare of millions from chronic levels of under-saving for retirement.

Publishing its highly awaited interim report, the commission said the lack of adequate saving for retirement risked “leaving large groups across the UK facing a severe cliff-edge when they retire”.

It warned as many as 45% of working-age adults were not saving into a pension at all, despite nearly half of them being in work.

Low and middle earners were most at risk, it said, with around half saving at minimum levels set by automatic enrolment with little else to fall back on for when they reached retirement.

Under auto-enrolment – a policy championed by the last commission – employers must place employees in a pension and contribute to their retirement funds. The rules state this must be a minimum of 8% of a worker’s earnings, with the worker paying in 5% and the employer adding 3%.

The report also found just 4% of wholly self-employed workers were saving for retirement, with even lower levels of saving for later life among younger self-employed people.

Highlighting the risks to personal finances later in life, it said about 30% of private pension pots were accessed at the earliest possible opportunity, with around half of savings taken out in full. Nearly half of this money was spent on large expenses like a car, holiday or renovations.

Led by Jeannie Drake, who was a member of the original Blair-era panel, its commissioners also include Ian Cheshire, the former chair of Barclays UK, and Nick Pearce, a professor of public policy at the University of Bath.

The commission is expected to publish a final report with recommendations for changes to government policy next year.

On Monday, details of its interim report, shared with the Guardian, signalled that a shake-up of pensions in Britain must involve measures to close a chasm in retirement savings between men and women.

According to the government-backed body, women approaching retirement have on average half the private pension savings of men, with a median pension wealth of £81,000 versus £156,000.

Drake said a “renewed national settlement on pensions” was required to ensure adequate saving for retirement.

“The recommendations we present in our final report will address the need to secure adequate income in later life and a pension system that is fit for decades to come.”

In its interim report, the commission warned that millions more people could be at risk of becoming reliant on state support in retirement unless action is taken.

Torsten Bell, the pensions minister, said: “Britain has got back into the pension saving habit, but the job is only half done with tomorrow’s pensioners still on track to be poorer than today’s.”