The pensions timebomb

The "bewildering complexity" of Britain's pension system after decades of meddling by successive governments is today blamed for the country's savings crisis.

A hard-hitting report from the Government's Pension Commission said workers were being put off making provision for their retirement by the daunting maze of different schemes.

Adair Turner, chairman of the commission, said governments had been ignoring the problem for "at least two decades and warned that " difficult choices" were unavoidable.

Today's report will not make recommendations but lays bare where policy has gone disastrously wrong, leading to an estimated £57billion a year shortfall in pension savings.

Former CBI boss Mr Turner said: "Successive governments have made changes to specific aspects of pension policy which appeared to make sense in themselves, but which have had unintended consequences and produced a bewildering complexity which makes it more difficult for individuals to make sensible savings decisions.

"We need an approach to pension policy which reduces complexity - and which can command consensus across successive parliaments and governments."

The interim report from the commission, set up by Tony Blair in 2002, says Britain's pension provision is in an even worse state than previously feared. It says the country has been in a "fool's paradise" where it had been wrongly assumed that people would be able to retire earlier.

The report says three factors combined to create today's pension timebomb:

The report says that with the proportion of people over 65 set to double by 2050, "either pensioners will become poorer relative to the rest of society, or taxes/National Insurance contributions must rise, or private savings must rise or average retirement ages must rise".