The head of the Pensions Commission has warned that falling rates of return make it impossible to sell individual pensions to the people the government wants to save for their old age.

Adair Turner said the poorest half of the population may not receive high enough returns to make savings worthwhile.

Forum Response: Age Concern

Neil Churchill, communications and marketing manager at Age Concern, told ePolitix.com: "Falling rates of return and the Pension Credit's potential disincentive to save are clear arguments for a more adequate basic state pension.

"Many potential savers on a low or middle income do not have access to affordable independent financial advice, which means they are less likely to take up a personal pension or other form of saving. In addition, many people may not benefit from having a private pension and one of the biggest challenges faced by the government at the moment is how to get people in low and middle-income groups to make appropriate savings.

"We would not agree that the average retirement age has to rise. However older people must have the option to continue working if they want to which means that employers must abolish their mandatory retirement age. Many people lose the option of working as early as their 50s - when their power to earn and save is potentially greatest - because of age discrimination.

"So for people to be able to work and save in their 50s and beyond 65, not only must employers mandatory retirement ages be abolished but age discrimination must be outlawed and the law enforced."

Forum Response: Help the Aged

Mervyn Kohler, head of public affairs at Help the Aged, said: "On the whole, we echo Adair Turner's analysis. For many people on a low wage, existing stakeholder and other personal pensions do not appear to be a good buy.

"Why sacrifice part of your hard-won wage packet when pensions appear to be providing smaller and smaller returns? We need to be much more imaginative about creating new, meaningful incentives for low-waged people to save for retirement.

"Mr Turner is also right to say that working later in life will become a reality for many. Here, we need to ensure that a longer working life is a matter of choice rather than of necessity, with meaningful efforts directed towards combating age discrimination in the workplace."