Business View: God bless us every one, but who will pay our pensions?

At the risk of being called an Ebenezer Scrooge, I am going to use the last Sunday before Christmas to talk about pensions. Actually I'm in danger of being a Marley's ghost because I'm going to warn companies, employees and, most importantly, the Government what is going to happen if they do not mend their ways.

The current system is clearly broken. Pension deficits for UK companies are running into the hundreds of billions, possibly even passing the trillion mark (though measuring them seems to be an art not a science). The Government itself is staring at a shortfall of hundreds of millions between what it promised civil servants for their retirement and what it has in its kitty. We are living longer and it looks as if we will be working longer. The old 20/40/20 formula (20 years to train, 40 years to work, 20 years to relax) will no longer apply. All this was exposed in the Government-sponsored report fronted by, of all people, the former J Sainsbury chairman, Sir Peter Davis, last week.

To add to the mess, the European Union directive on age discrimination means that companies will no longer be able to force their employees to retire before they are ready. The Government has said that this only applied to people under 65. But most experts agree it will only take one case before the European Court of Justice to blow that compromise apart.

It means that if companies want older employees to retire - so that they can promote people and inject fresh blood - they have to ensure they have good pensions. Companies, though, cannot afford to be too generous and need employees to save for themselves. But many won't.

This is where the Government has to come in. So far, it has refused to countenance the idea of "compulsion" - forcing people to save for their retirement. But it cannot hold out for this. Mellon Consultants published a survey of companies last week that found that 68 per cent of them supported compulsory pension contributions from employers and 63 per cent said employees should be made to pay into funds as well. This attitude is now supported by trade unions, which have realised that, left to their own devices, too many people will spend the money on booze, fags or a new sofa rather than saving for their old age.

Alan Johnson, the Work and Pensions Secretary, has some difficult choices to make. But if he is not willing to get tough, the prospects for our old age will resemble a Dickensian tale.

Bob on his mind

Bob the Builder is back on American TV screens after a year "resting". This will be a great relief to his owner, Hit Entertainment, which has suffered from a construction slump, as it were, because his lack of visibility had a noticeable effect on merchandise sales. Hit has been the subject of a great deal of bid speculation in recent months, with many believing that Bob the Builder is being held back by his parent's relative lack of muscle. Would, say, a Disney be able to leverage our friendly construction worker more effectively.

The only intelligence I have on this is that Michael Eisner was in town for the first night of the Mary Poppins musical last week. And Hit was so much on his mind that he mentioned Bob the Builder in a conversation about something entirely different.

Kelly on the rise

Who could credit the rapid elevation of Ruth Kelly, 36, the former economics correspondent of The Guardian? Only a few months ago she was Financial Secretary to The Treasury. Then she had a brief sojourn at the Cabinet Office, before her appointment to the Cabinet last week as Secretary of State for Education and Employment.

Some in the financial services industry are rather bemused. Indeed, over lunch last week a senior figure said she was one of the least impressive ministers he had met, and that she showed nothing at the Treasury that indicated that her next move would be up the greasy pole rather than down.

But then, who among us understands politics?

j.nisse@independent.co.uk