Determined not to be boring

You might have seen those TV ads this week with the talking Welsh sheepdogs, copied from the film Babe, who hope they "won't still be herding sheep at the age of nine". The idea is to raise awareness of the Government's launch of low-cost stakeholder pensions. Of course, each dog year is worth seven human years, so that would make our shepherds 63 - just two years before the statutory retirement age.

You might have seen those TV ads this week with the talking Welsh sheepdogs, copied from the film Babe, who hope they "won't still be herding sheep at the age of nine". The idea is to raise awareness of the Government's launch of low-cost stakeholder pensions. Of course, each dog year is worth seven human years, so that would make our shepherds 63 - just two years before the statutory retirement age.

The whole idea of the £6.5m campaign is to persuade the apathetic British public that they must save for old age, and that they must start doing so now. Stakeholder has been designed to appeal to the less well off, with a 1 per cent cap on the annual charges that can be deducted from your pension "pot". This is all laudable stuff. In trying to arouse the public's interest, however, the Government has its work cut out. In my experience, even to mention the word "pension" in the pub is considered boorish, while use of the word at a dinner party can result in you never being invited again.

The problem is that pensions share three attributes: They are intrinsically boring, excruciatingly complicated - and absolutely fundamental to your well-being in old age. Get your pension right, and you can spend your twilight years playing golf and going on cruises to the Med. Get it wrong and you could be forced to work later into old age, suffer a huge drop in income, even lose your house.

Some people still believe the state should pick up the tab, and that Margaret Thatcher's cutting of the link between your earnings and what you get as a pension in the early 1970s was the most evil thing she ever did. The majority, I suspect, acknowledge that demographic changes - the dramatic ageing of our population - means that tying the state pension to final earnings would end up bankrupting the country. Just because France and Germany haven't cut that link yet doesn't mean they have some convincing, alternative answer up their sleeves. They don't. Their attitude seems to be that of Mr Micawber, hoping something will turn up (a surge in the birthrate, perhaps? More immigration?).

So, we've all got to put our hands in our pockets and fork out each month for a pension policy. But who should we go to for advice? As I said, these products are horrendously complicated. A huge change to how financial advice is provided in the UK has just been enacted, again with hardly anyone noticing. After all, you wouldn't get very far in the pub launching into: " Have you heard they're scrapping polarisation?" Polarisation was introduced in the 1980s, very sensibly, to remedy a long-standing scandal.

Previously, big banks and insurance companies could advise customers to buy their own branded products, regardless of how badly performing or unsuitable those products were. The big boys were under no obligation to prove they were giving their poor customers good advice. The Financial Services Act 1986 was going to change all this. It introduced the principle that you either had to sell just one company's product and offer no advice on any others; or you had to become an Independent Financial Adviser (IFA) and prove that you had given "good" advice to every customer on a wide variety of suppliers.

This cast-iron division - between "tied-agents" and IFAs - was dubbed polarisation. And this Government has started to scrap it. No fanfares, no rows in Parliament, no riots. Barclays and Legal & General have already taken advantage of this loosening, by tying up to form a stakeholder-selling juggernaut. The combined advertising and sales resources these giants can devote to flogging their products dwarfs any IFA in the country.

Independent advice seems now to have gone out of the window. We are back to before the 1980s, with big institutions advising us to trust them, and take out whatever product they're peddling at the time. It is obvious the Government has moved to scrap polarisation in order to ensure the launch of its flagship "stakeholder" pension will be successful, by getting the big boys on board. In so doing, it has planted a time bomb that will blow up in its face in - what - 10 years' time? On the other hand, we'll have another lot of politicians by then.

Meanwhile, stick with IFAs. And remember. They actually like talking about pensions ...

* John Willcock is Personal Finance Editor of The Independent

* j.willcock@independent.co.uk