Simon Read: The retirement plan that doesn't work

Does the idea of giving up work fill you with joy – or fear? Some can't wait until retirement, and have great plans to travel round the world or hone artistic skills – or even just spend the time relaxing or catching up with valued friends. But even these optimistic folk are having to accept they're facing a fearful future.

Research from pensions firm MetLife published on Wednesday revealed that a third of people who are five years from retirement are either unhappy with their pension or feel they wasted their money by investing.

They've got good reason to feel unhappy. The stock market crash has meant anyone planning to retire in the next few years will realise they've been taken for a sucker. The amount of money in their retirement fund has shrunk and the cost of buying an annuity – which pays retired people an income – has risen, both as a direct result of the credit crunch and world recession.

According to Dr Ros Altmann, a former pensions adviser to the Treasury, the blame for this lies with the UK pensions industry, which has for decades staked people's retirement cash on the stock market. In a report published this week, Dr Altmann claims that "nobody explained to workers that they were effectively gambling their future security on the stock market".

She points out that "most people want a measure of security and are not so worried about maximising investment returns. Essentially, the entire UK pension system has been based on a bet that equities would always do well enough over the long term to reliably deliver good pensions."

According to the MetLife survey, many people wish they had never bothered with a pension at all. Most now recognise they may have to work longer and their pension savings will not provide them with much in retirement as the stock market may not be a reliable long-term investment.

Dr Altmann is calling for new approaches to retirement planning, pointing out that pensions fulfil two functions. First, they need to provide security of income in old age. Second, they are long-term savings from which investors can try to obtain strong returns.

"We have to rethink our whole approach to pension saving and be honest with people so they can understand the need to differentiate between the minimum security aspects of pensions and aiming for high investment returns, to understand the difference between a pension 'fund' and pension 'income', and to know the vital questions they should ask themselves along the way," Dr Altmann says.

This issue isn't just going to be affecting those retiring soon – it will impact on all of us still in work. With the Government cutting state benefits, and the pensions industry failing to secure we're working towards a wealthy retirement, individuals are going to have to take responsibility for their own financial future.

Forget all the flim-flam or complexity about pensions. Just consider this: a pension is simply a savings scheme. It is effectively the name of an account where you stash money away until you need it, when you retire. If it was a holiday savings account you would check the money was safe and would cover the cost of your holiday. Treat your pension planning in the same way – with regular checks and adding to it when necessary – and you could yet avoid facing retiring in penury.