It's fine for rock stars or chat show hosts, but most people don't want to work for ever

Flicking through the television channels the other night I caught Sir Cliff Richard performing on Michael Parkinson's show. Sir Cliff seemed to be enjoying himself at the age of 63, releasing another album and no doubt preparing for another tour. The average retirement age in the United Kingdom is 62. He is rocking when most people are retiring. Meanwhile, Mr Parkinson is still working extensively in his late sixties, with a chat show here and a radio programme there, enjoying himself as much as he was in his thirties.

They are unusual in their youthful exuberance. There is a pensions' crisis in Britain as there is in most parts of the world because we live longer and retire earlier. Sir Cliff and Parky will have been watched by many who are younger than them, but who stopped working long ago. For some time there was a complacent myth that a pensions crisis was looming in most parts of Europe, but that Britain would escape. In reality, Britain is better prepared than many countries, but is by no means immune from a situation where vast numbers stop earning incomes at a relatively young age. Today's government-commissioned report from Adair Turner on the future for pensions implies that radical policies are required to meet the inevitably severe shortfall in funding.

Even before Mr Turner outlines the way forward - and he will not outline a detailed set of proposals until the election is safely out of the way - the debate in Britain is in danger of becoming distorted by misleading hyperbole. The mood music among some Blairite outriders suggests they will not flinch from radical reform on pensions, taking on those weak-kneed conservatives in the Treasury and elsewhere. But in his measured speech on welfare reform yesterday, Mr Blair was more restrained, speaking of the need to "move ahead by consensus" on pensions and highlighting the Government's achievement in taking a significant proportion of pensioners out of poverty.

For the Conservatives, David Willets parades his alternative proposals as if he had almost solved the problem. I insert the qualification, for no one can accuse Mr Willets of being a messianic politician. Mr Willets is the most thoughtful and innovative member of the Shadow Cabinet. If he had the charisma to match his grasp of policy he would be a formidable leader of his party. He knows more about the pensions crisis here and in every country around the world than any other figure in British politics, but he has not solved the problem. His proposals to end the targeting of poorer pensioners and reintroduce universal pensions linked to wage increases would not move matters on as much as he claims. There would still be a substantial shortfall in funding and some poorer pensioners would be worse off.

The targeting of poorer pensioners has fallen out of political fashion. I would be surprised though if the policy is unfashionable among those who benefit from it. Poorer pensioners receive an additional £43 a week and I assume they are reluctant to hand some of it back to those who are relatively well off, a redistribution from the poor to the affluent. Ministers should be proclaiming their achievements in this particular area, although some are evidently embarrassed by it.

Mr Willets and others argue that this more generous provision is a deterrent against saving for retirement. This is the case with a small group of low-income earners, but it is difficult to envisage people in their thirties uttering the sentence: "Let's blow our wages now on a new Mercedes and then we will qualify for the pensioners' credit in 30 years' time." As one government insider pointed out to me yesterday, a supporter of targeting, ministers have enough problems alerting 60-year-olds to the benefits of the pensioners' credit. The detailed financial implications will almost certainly pass 30-year-olds by.

The debate about targeting and universal provision is something of a red herring in the context of Mr Turner's report. Of course it is an important debate and might be the subject of a further round of internal tensions between Downing Street and the Treasury in the future. For now the much bigger question is how to increase the overall level of provision - targeted or not.

Only a limited number of options are available to any government. One solution would be substantial rises in taxation to pay for higher pensions. This will not happen. Quite a few Downing Street insiders twitched nervously when taxes were raised to pay for improvements to the NHS. The Government is not about to put up taxes to meet the shortfall in pensions (a central proposal in John Smith's vote-losing Shadow budget in 1992). Meanwhile, the Conservatives are desperately looking at ways to pledge tax cuts. For them tax increases are out of the question. Even if a Labour government dared to put up taxes in the future, a large increase in funding for pensions would be a low priority compared with the need to sustain high levels of funding for public services.

Instead, at some point soon a government will have to take a deep breath and introduce compulsory savings for a second pension. At the same time, the average age of retirement will have to rise above the tender age of 62. This second measure is more complicated and challenging than it might seem. Most people work long hours in unfulfilling jobs. It is one of the great sleeping issues of our time - not so much the balance between work and leisure but the nature of work itself.

Some ministers tell me that those in their late fifties and early sixties who claim incapacity benefit are exhausted and run down by work, genuinely incapable of working any longer. One of this Government's successes has been getting people off benefits and into work. There is more scope for moving younger people off incapacity benefit, but apparently less so for older people.

In his speech yesterday, Mr Blair rightly called for a change of culture in the workplace, where the focus is too much on younger people and not enough on exploiting the talents of those with more experience. Cliff Richard and Michael Parkinson are leading the way. But not all people have the option of continuing in work as rock stars and chat-show hosts. Nearly all of us would work forever if we could sell out Wembley Arena or host a peak-time chat show. There are limits to the joys of extended working in a supermarket or manual work when the alternative at the moment is early retirement.

At some point soon the focus will move from the need for full employment to the implications of extended employment. The section in Mr Blair's speech yesterday when he emphasised the importance of lifelong learning will acquire a new significance in this context.

Within a decade we will work longer and we will be compelled to save. This will raise a whole new set of thorny questions, but political parties already frightened of taxing and spending too much have no alternative route to take.

s.richards@independent.co.uk