The live-for-now generation

ONE in two workers is threatened with poverty in old age because they are not saving privately for retirement, Government figures warned yesterday.

The official survey found that only half of Britain's 28 million-strong workforce has a private pension, leaving the rest relying heavily on the state. Many young workers are unwilling to put cash aside for the distant future, preferring instead to spend their wages on enjoying life now.

Only two years ago, seven in ten workers had some form of non-state pension. The figures again turn the spotlight on the pensions crisis, a multimillion pound shortfall brought on by longer life expectancy and declining fund values, which leaves millions at risk of a poor old age.

They will also be a disappointment to the Government, which denies there is a major problem.

In the study, a fifth of workers said their main source of income when they retire will be the Basic State Pension, now worth just £77.45 a week.

The self-employed and part-time workers - most of whom are women - are particularly vulnerable to suffering poverty in old age.

However, many people were still optimistic, with 60 being the average age at which they expect to stop work. This is despite warnings from ministers that workers will have to stay at their jobs longer and save more for retirement.

Some critics blame the falling number of people with a private pension on the Government, saying saving has been made too complicated, putting them off.

Many, however, can simply no longer afford to save during an economic downturn while others want to spend rather than save while interest rates are at a 40-year low.

The Conservatives said the study showed that Labour has failed to get a grip on the pensions crisis. 'All attempts to increase the number of people saving have failed,' said pension spokesman Oliver Heald. 'The number has fallen dramatically, confirming that there is a major pension crisis.

'This is yet another example of Labour denying there is a problem, rather than admitting the truth. Ministers are just burying their heads in the sand.'

Joanne Segars, head of pensions at the Association of British Insurers, also urged ministers to act. 'The results graphically illustrate the need to raise awareness and understanding of the need to save, the risks of not doing so and what level of state support people can expect in retirement,' she said.

The research revealed that three-fifths of the 1,200 people surveyed have heard of the Government's flagship stakeholder pension scheme. But 50% of these workers had only heard the name.

Work and Pensions Secretary Andrew Smith has already been accused of missing a golden opportunity to tackle the problem. Last month, he published long-awaited proposals. However, these offered little hope of stemming the dramatic closures of traditional schemes linked to final salary and provided few incentives to save.

Instead, a drive to outlaw ageism in the workplace could be used to offset the crisis by raising the age at which people have to stop work.

The retirement age of 60 for women and 65 for men would be scrapped under the plans, with a possible new retirement age of 70.