William Kay: As the pension dithering goes on, let's find a role for older workers

How, precisely, do we want to save for our retirement?

How, precisely, do we want to save for our retirement? The question was raised in October by the Turner Report, and reared its head again last week when Sir Peter Davis, late of Prudential and J Sainsbury, produced the report of his Employer Taskforce.

Sir Peter wants employers to snap to attention and recognise a responsibility to pay for their workers' pension funds, and he urges workforces to campaign for the same.

This has the advantage of providing a focal point for the debate, but neither Sir Peter nor the millions of employed people should be under any illusion that their efforts are going to whistle money out of thin air.

As Adair Turner pointed out, there are very few options when it comes to building a pension pot to draw on in retirement: higher taxes, more saving, work longer or let pensioners grow poorer.

Note that there is no mention in that check list of "twist employer's arm". Because, in nearly all cases, employers' contributions to your pension will, directly or indirectly, come out of your wages.

If you earn £20,000 a year and your company is told to up its contribution from 5 per cent of salary to 15 per cent, say, the extra £2,000 has to come from somewhere. And you can bet that the management will be a lot tougher about next year's pay rise.

It is all very well for Sir Peter to parade his "killer statistic", that where a company offers an occupational pension scheme, three in four employees start contributing too. I am all for encouraging the savings habit, but the end result is that, one way or another there, will be less money in the workers' pay packets and more in their pension pots.

This is commonly known as saving. If disguising it as part of a pension scheme kids more people to play along, fine. But it is a bit like the now widely derided Atkins diet, where all the flimflam is simply a smokescreen to sweeten the pill of consuming fewer calories.

I would rather have a more grown-up debate about where the money is to come from to pay for us to put our feet up in old age. Mr Turner's Pensions Commission is due to tell us next autumn what its solution is. Whatever the recommendations, the killer fact is that politicians regard the topic of pensions rather as the proverbial princess regarded the pea in her bed - as a distant but unmistakable source of discomfort.

So the odds are that we shall muddle through with a mixture of all of Turner's four options, including many pensioners sliding nearer the poverty line. This makes all the more craven the Government's decision this week to kick into the long grass the knotty problem of whether companies should be forced to employ over-65s.

For, as more of us stay fitter longer, continuing to earn a wage is going to be the only way to make up for our lack of long-term savings.

A little lateral thinking about how to make the best use of the growing army of oldies will do a lot more good than throwing a few pence into a pension pot.

* Whatever one's views on the resignation of David Blunkett, his departure will, with any luck, be a blessing in disguise for the chances of children leaving school with a decent level of financial knowledge.

The reshuffle has meant a Cabinet posting for 36-year-old Ruth Kelly as Education Secretary. She left the Treasury only two months ago where, as Financial Secretary, she was responsible for the Financial Services Authority. Ms Kelly spent her last five months on the FSA's Financial Capability Steering Group, which is charged with finding ways through the many obstacles to financial awareness.

I wish Ms Kelly well in her battles with the educational establishment to get financial education more deeply embedded in the school curriculum. She can hardly do worse than her predecessor, Charles Clarke.

The account that kicks you when you're down

It is hard to know where to begin with the Moneyback account that Halifax launched this week, so riddled is it with strings and pitfalls. The bank's current account, paying 3.04 per cent interest, is a model of simplicity by comparison, and the penalties there are savage enough.

In return for committing £1,000 a month to the account, which for most people is effectively their salary cheque, Halifax will pay a 1 per cent loyalty bonus for debit card spending up to £10,000 a year. Anyone rash enough to spend more than that will be rewarded with only a tenth as much, 0.1 per cent.

And money left in the new account will earn the princely interest of 0.5 per cent - much better than most, but the rivals don't insist on the £1,000-a-month clause. This is designed to hook customers in to other Halifax products.

The overdraft rate of 13.9 per cent is pitched to beat most of the other banks, but compares poorly with the best loan rates of 7 per cent or less.

God forbid, however, that you should spend the required £10,000, lose your job and miss two consecutive £1,000 payments. Halifax will then coolly add insult to injury by resetting your £10,000 to zero, thus swiping your £100 loyalty payment when you need it most.

But what else should we expect from the bank that did its best to wriggle out of paying a penny more compensation than necessary for operating two-tier mortgage rates? You have been warned.

w.kay@independent.co.uk