Baroness Altmann has warned pension freedoms are not working properly because millions get no independent guidance or advice.
The former pensions minister was commenting after the Financial Conduct Authority published a consultation aimed at addressing the flaws in 2015's pension reforms.
Baroness Altmann said savers needed more guidance, advice and better value drawdown products as they faced more risks because they were increasingly going into drawdown.
She said: "As the traditional defined benefit schemes are nearly all closed, millions of people have defined contribution pensions. With more and more people relying solely on such pensions - which place all the risk onto the individual - it is vital that customers have access to good value, suitable products, independent guidance and advice to help them make the most of their pensions."
She said the reforms were needed but added that individuals needed help to cope with the risks and that the new system is still plagued by many of the same problems as previous regime.
Baroness Altmann added: “It is a real pity, lessons seem not to have been learned. Instead of buying poor-value annuities, without shopping around, unadvised customers are just buying their existing pension provider's, often-expensive, drawdown product, without shopping around.
"An astonishing 94 per cent simply roll into the drawdown product offered by their pension provider. At least, with the new flexibilities, they will have a chance to improve their choices in future.”
Her comments came after the FCA said is planned to force providers to offer their customers easy to access ready-made drawdown investment products to prevent them from sticking their money into cash.
This follows estimates from the FCA that around 50,000 non-advised consumers were holding only cash, with more than half at risk of losing out on significant returns as a result.
It found someone who wanted to draw from their pot over a 20-year period could increase their expected annual income by 37 per cent by investing in a mix of assets rather than just cash.
She said: "The Financial Conduct Authority’s latest report on how pension freedoms have impacted the retirement income space shows that there is much work still to do to ensure the new regime works well for pension savers.
"Those customers without financial advisers are not being well-served by the existing market and providers have failed to innovate sufficiently to serve their customers' needs.
"Providers have not modernised their drawdown products to account for the new pensions landscape and a very different customer profile. People using drawdown now tend to have smaller funds than before and are likely to be less financially savvy and less well-off than in the past.
"Designing good value, sensible investment options for them, would help improve their retirement outcomes."