Britain's pensions crisis is as a big a threat to society as terrorism or global warming, David Willetts, the Conservative work and pensions spokesman, was warning on Monday.

The scale of the crisis and its implications are still not understood, he argued, as he forecast companies going bankrupt, taxes going up, labour mobility being reduced, local government in crisis and charities collapsing.

Forum Response: Association of Retired Persons Over 50

A spokesman for the Association of Retired Persons Over 50 said: "The picture painted by David Willetts of a future blighted by global warming, terrorism, company bankruptcy, increased taxes - and 'above all' a threat to the living standards of pensioners' is, if nothing else, an apparent attempt to bring the subject up to the level where it belongs - among the major issues of our time.

"What is not forthcoming - and, indeed, has not been apparent in the policies of successive governments for several decades, is any acknowledgement of the contributing factors which have brought about the current situation and the need, in the light of mounting evidence on all sides, to totally re-think the role of the state. The original concept of the state pension as a 'safety net' may have been justified at its inception but both social expectations and economic realities have changed to such a degree that the time must be approaching when it will be seen as the only guaranteed source
of income in retirement.

"This is, of course, a contention with which David Willetts and, on the evidence, the present government might disagree. There is one thing both should note however. Global warming and terrorism, and even a few company bankruptcies do not rank very high in the public mind. An enforced, but avoidable, drop in living standards among a generation which has only known rising prosperity throughout its working life is, however, quite another matter."

Forum Response: Help the Aged

Mervyn Kohler, head of public affairs for Help the Aged, said: "Without significant policy changes, the pensions melt-down forecast by David Willetts could occur. His analysis shows the result of trying to solve isolated problems in the system in the absence of a robust overview. In the big picture, as most commentators acknowledge, we all need to work (a bit) longer and save more, but there are precious few policy levers in place to help drive this forward. And we desperately need to reform the mishmash of a miserable state pension and widespread means-tested benefits which passes for a survival package for our older population."