Crisis. Twenty men in grey suits assemble at short notice in a bunker in Holborn. I am one of them. The UK political agenda has been turned upside down.
Forget Iraq. Suddenly the focus is domestic, and here we are commanded to provide urgent pearls of wisdom. The guru du jour enters and begins to hold forth on the new agenda priority. Ros Altman outlines Tony Blair's new Achilles heel - pensions.
It doesn't seem that long ago that the UK financial press was filled with smug articles about how superior the UK pensions system was to our continental competitors - all the more reason for the UK to stay outside the eurozone.
Reading the first report of the Pensions Commission, this lost world suddenly appeared like never-never land. No wonder the new Secretary of State for Work and Pensions, Alan Johnson, said the Government was now seeking "the pouch of fairy dust" to get us back there.
This report is enough to reduce the driest pensions guru to screaming hysteria. Way back in the late 1990s, the UK's private sector seemed to offer some of the best pensions in the world through a series of well-funded final salary schemes. Membership of such schemes has fallen an alarming 60 per cent since 1995, and only 14 per cent of new private sector employees now enter this safety net. The report estimates at least nine million private sector workers now have inadequate retirement provision. And these are the lucky ones. More than half the UK's population still has no pension scheme at all, and will fall back on state provision. Since we are all living longer, at current rates of funding this would mean that in 20 years their state pension would be worth at least 30 per cent less than today's (hardly generous) sum.
How have we got into this position? There are some big picture changes which are not the Government's fault. The collapse in world stock markets and the dramatic improvements in life expectancy in the past 20 years are factors difficult for anyone to predict.
At the same time, pensions may yet prove to be this Government's biggest domestic mistake. Gordon Brown has created the most complex pensions system in the world. This perhaps distracts voters from the various ways he has actually undermined pension provision, not least by removing the dividend tax credit on pension funds while also carrying out a serious assault on savings. We have some of the worst savings incentives in the world, and in the case of ISAs, he even threatens to remove these.
In addition, Mr Brown is guilty of the sin of omission. He turned a blind eye to private companies' mass exodus from defined-benefit pension schemes - the biggest rewriting of employment contracts in history.
I remember, not that long ago, trying to describe the looming crisis to a man from No 11. He looked at me as if I was mad. As Dr Altman points out, this means companies are now contributing around half of what they used to.
There is no easy way out for this government and its successors. Increased life expectancy must inevitably lead to some raising of the retirement age for state pensions unless we are to pay even higher taxes.
But please do not ignore the private sector. The more provision there, the less the cost of the tax-funded safety net. Why should you let companies completely off their previous contractual liabilities? Combine this with some tax incentives for savers to encourage personal provision.
Gordon, start sprinkling a little fairy dust and get us back to where we were. Can we expect that from this Chancellor? Or is that really never-never land?Reuse content