The shake-up in the sector unveiled on Wednesday will drive up the cost of annuities, leading to lower pension incomes, says the Institute for Fiscal Studies (IFS).
The Budget changes will also see an extra two million workers, including hundreds of thousands of Scots, dragged into paying the higher 40p rate of tax, the IFS predicts.
Labour warned that the reforms risked leading to another mis-selling scandal, like those seen with other financial products.
Pensions Minister Steve Webb, a Liberal Democrat, also came under fire after he said he was relaxed that the changes could allow pensioners to blow the cash on fast cars.
Challenged on the issue he said: "If people do get a Lamborghini, and end up on state pension ... that is their choice".
The Government defended the Budget, saying overall it was good news for workers and savers.
The Chancellor announced what he described as a revolution in pensions. Under the changes no-one reaching retirement will be forced to buy an annuity.
But experts warn the current annuities system depends in part on pensioners who die early and are effectively subsidising those who live longer.
If those who believe they are unlikely to live to a ripe old age decide to opt out of the system, and take their lump sum instead, there could be "market failure", Paul Johnson of the IFS warned.
In his analysis of the Budget, Mr Johnson said there were some "genuine uncertainties" about the effect of the policy.
"Most importantly it will likely make annuities even more expensive for those who do want to buy them," he said.
"The market will become much thinner and there will be greater levels of adverse selection - only those expecting to live a long time will want to buy an annuity, thereby driving up the price. There is a market failure here. There will be losers from this policy."
The IFS also predicted those paying the 40p rate of tax would rise from 3.3 million in 2010-11 to 5.3 million in 2015-16.
The Chancellor defended his plans. He said pensioners were "responsible people who are capable of making decisions about their future".
SNP MP Mike Weir urged ministers to clarify whether those who chose to take money out of their pension pots could lose benefits as a result. He queried whether the changes would lead to the new funds being treated differently by ministers "when someone in their late fifties finds themselves out of work and having to seek means-tested benefits".
"Clearly a traditional pension is not accessible in these circumstances, yet one of the 'new' types may well be treated as savings rather than a pension and could well be accessed," he said. "The result could be that a period of unemployment could conceivably wipe out someone's pension savings."
He added that Mr Webb "did not address the issue but instead talked about group pensions having an employer contribution".
"Many people, however, still have a personal pension and this could have a significant effect. It is vital the UK Government clarifies the position since it will be a significant factor for many people in determining how they save for retirement."
Other critics questioned what would happen if pensioners chose to invest the money in property instead of fast cars, and predicted the move could make it even harder for young people to get on the housing ladder.