According to government estimates, up to 3 million workers are "seriously under-saving" for their retirement, and an independent commission will now investigate whether workers should be forced to make additional private pension arrangements.

Announcing the proposals in parliament, Pensions Secretary Andrew Smith said the government preferred a "voluntarist approach", and it was up to employers and employees to "rise to the challenge".

Pensions experts say the UK savings shortfall could be as big as �27bn.

Dr Ros Altmann is a pensions and investment expert, investment banker and economist. She also advises the government. You put your questions to Dr Altmann in a LIVE interactive forum.

Transcript:

Newshost:
Hello and welcome to this BBC interactive forum. I'm Susanna Reid. The compulsory age of retirement is to be scraped as part of the government's strategy for tackling the pensions crisis. It wants to encourage people to work for longer, it's also going to overhaul the complicated tax system ruling UK pensions to try and make it easier for people to save.

But do these measures go far enough?

Well to answer your questions I'm joined by pensions expert Dr Ros Altmann. Thanks very much indeed for joining us.

What for you were the highlights of the statement today in the Commons?

Ros Altmann:
Well Susanna I think, for me, the highlights were the summary that the Secretary of State made right at the beginning which is that we can't solve this problem just by saving more, we need to encourage people to work longer and to save more. Now as far as the measures that he's announced are concerned I think we've got very good measures to encourage people to work longer but I'm not convinced that we've done enough to get people to save more. In terms of the pension aspect I can't quite see what we've introduced today that would make people who weren't putting money into pensions yesterday suddenly decide to do so - we're not getting any compulsion, we haven't heard about any better incentives and simple products are not necessarily the answer, we've seen that with stakeholder.

Newshost:
Okay, well as you say, I mean, the purpose of the statement was to encourage more people to save into a pension. So let's consider some of the questions on that. Dan from London says: "Why are we given figures of an estimated savings gap of �27 billion when to the individual this means nothing?" This is a figure that has been reported throughout the day that there is a shortfall between what people are saving and what they should save of �27 billion. Dan says: "Surely people would have a far better understanding of the situation if it was communicated in a way which meant more to each person heading for retirement." Basically can you give us an average individual shortfall of savings on their pension?

Ros Altmann:
I don't think it's possible to give an actual average because it depends on what income you want to live on. If you want a high standard of living and lots of money to spend when you retire you'll need a lot more than if you want to have a quieter lifestyle and not spend too much. So actually I agree with the comment that the �27 billion doesn't mean a lot to you individually but it gives a feeling for the economy as a whole of how much more we might need to be saving as a society to provide decent levels of pension when we retire. And then if you took an example of somebody who wants to provide a �10,000 pension for themselves, if you start saving when you're about 20 you might need to save say �50 a month every month until aged 65, if that's when you might think of retiring. If you don't start till you're 30 that doubles - you need to save say �100 a month and if you start in your 40s it goes up much more than that, well over �200 a month.

Newshost:
Well let me ask you some specific questions from people who have asked you how much they individually should be saving. Clare Warren from Oxford says: "I'm a 25-year-old graduate student with high student debt and no chance of earning for the next two years. I'm increasingly becoming worried about press statements of you must save at least �50 a month by the time you're 25 towards your pension. I won't be able to afford that." So what are the best options for many people in her situation who don't start proper jobs until their late 20s, simply can't afford that kind of figure?

Ros Altmann:
Obviously I'd like to say, first of all, that I'm not here to give people independent financial advice and they would need to see a proper financial advisor to look at all their circumstances. But as a general rule if you have high debt it's not necessarily advisable to save. But then you should be aware that if you're not saving in your early 20s you'll need to save a lot more when you do start work and when you get into your late 20s or early 30s. So you might have to make it up. The idea would be perhaps if you get an inheritance or if say you have a birthday present or you win some money on the lottery you might decide that you want to put a bit of money into a savings plan but I think you do need to think carefully about managing your debt as well.

Newshost:
The trouble of course is that many people in their 20s, a lot of people in their 30s and indeed some people who are older don't think in the long term, do they, it seems a lot of money to save between �50 and a �100 a month when you're in your 20s and maybe you've just started earning, for that reason a lot of people did want the government to introduce some sort of compulsory pension scheme that people had to save into a pension but there was no sign of that was there.

Ros Altmann:
There is no sign of it yet but the Secretary of State made it quite clear that he thought if voluntary saving doesn't work he may have to compel people. There are lots of reasons why one would be very nervous about forcing people to save. First of all the question that you just asked me from the person with high student debt, for example, if they're earning but they've also got high debt levels it's not necessarily the right thing for them to do to put money into a pension, they should probably pay off some of their debts first, but you would force them to put the money into a pension. So it does depend on individual circumstances. But for someone in their 20s who's working and earning a salary without high debt, yes, they should be putting money into a pension.

Newshost:
Okay, Anthony from the UK says, at 47 years of age with no pension arrangements in place and no savings or investments, other than his house, to fall back on, is it now too late for him to do anything: "With many tales of pensions mis-selling I'm at a loss to know who to turn to for impartial advice. Any guidance would be greatly appreciated." Well of course you can't advise him on a pension but a lot of people must feel the same way - the whole pensions mis-selling scandal has put a lot of people off and it may be too late for some.

Ros Altmann:
That's one of the disappointing things I think I've felt about the announcements that we've heard this afternoon - there is nothing to really get people like this to think about putting money aside for their future. And in fact with the pension credit policy that we've got in place, the means tested benefits, that's so good for today's pensioners it actually means that it doesn't benefit you necessarily to save in a pension. You perhaps should be putting money into an ISA but not into a pension because you will lose at least 40 per cent of any pension that you save by the time you retire if you haven't saved enough and that's what I feel would have been really helpful today, if we'd had some clarification that the means tested benefit system is not going to penalise you at all or is only going to be temporary so that by the time you come to retire you won't lose so much of your savings that it makes it inadvisable for you to put money into a pension at all.

Newshost:
Another point on the incentive or disincentive to invest in a pension, Martin from England: "One important criterion is needed before I'd ever invest in a pension, that's the legal right to retain the same terms and conditions that I signed up to initially, I will not invest in any scheme where one side can change the rules unilaterally at any time." Very suspicious - did the government offer any sort of confidence for people suspicious of pensions and having maybe raided or changed?

Ros Altmann:
There was talk about some protection for final salary schemes but I don't think we've gone far enough in terms of preventing employers from changing the promises that they make and if he's talking about an employers' scheme, at the moment, for people who are not yet retired, there's no protection whatsoever - the company can just wind up the scheme and you can lose an enormous chunk of your pension.

Newshost:
And indeed Keith Humphries has just e-mailed us from Wetherby in West Yorkshire: "I'm in receipt of a pension, my ex-employers have just written proposing to change the terms of the pension - can they do this?"

Ros Altmann:
It's not easy for an employer to change the terms of the pension once it's already in payment. There are a number of laws which stop them from doing it but they can wind up the scheme. I don't think that it's very easy for an employer to actually change the terms once you've got your pension in place.

Newshost:
Ok so Keith perhaps go and talk to a financial advisor about that. Matthew from England says: "Instead of a pension could I do better by saving my money in a high interest rate savings account and when I come of age rely on what I've saved and my state pension?"

Ros Altmann:
What you mustn't forget is that when you put money into pension you do get some tax relief. So for every �3 that a higher rate taxpayer puts in, the government will put in �2. For every �3 that a basic rate taxpayer puts in the government puts in about 85p, which is still 85p more than you would get if you put your money into a savings account in the high street. But the problem that I go back to is if when you come to retire you are eligible for means tested benefits - and by next year 57 per cent of pensioners will be eligible for means tested benefits - in other words, if you haven't saved enough and estimates suggest you have to save about �80,000 before you can be clear of the means tested benefit threshold, then you would not be better off in a pension you would be better off in an ISA.

Newshost:
Let's talk about the retirement age because Andrew Smith announced that they're scraping the compulsory retirement age, people will be able to work longer, they'll be able to work part-time while they're claiming their pension, Rachel Tomlinson writes in to us from Coventry: "I work for a company that has a policy which says all employees, male and female, must retire at age 60, can you tell me with this proposed idea of doing away with an official retirement age of 65 whether this will affect companies like the one that I work for? That is making them employ people until they themselves feel they're ready to retire."

Ros Altmann:
That's definitely the idea of this reform. I mean I do think it's an excellent idea. It may be that it will be consulted upon and some problems will arise but I'm sure that the government is very keen to make it impossible for you to just get rid of a worker because they are a particular age. And in EU law by 2006 we will have to have age discrimination legislation, so you can't discriminate against people on the grounds of age and 60 is not old, you know people of 60 and 65 nowadays are quite capable of working and very often employers want them to work longer.

Newshost:
Actually we've had a couple of e-mails from people living abroad. Robert Wilson writes to us from Rio de Janeiro in Brazil: "Before going to live abroad 25 years ago I worked and contributed to the national pension scheme for 15 years, how can I find out more about any entitlements that I have?"

Ros Altmann:
What you have to do is you have to contact the Department of Work and Pensions, they have an advice line and you want a form BR19. You phone them up or you can e-mail them or write to them and you tell them who you are and where you lived or your last known details and they will have your records and they will send you a statement of how much you can expect to get from the state system.

Newshost:
Would that answer apply as well to Derek Hough from California? "I was born and worked in the UK for 27 years, contributions included graduated pension, I came to the USA in 1987. Can I expect a pension, if so how, when, how much and what do you advise on what there will be on offer?"

Ros Altmann:
The pension will still be available at the normal pension age of 65 and you'll need to write, again, to the DWP or phone them up and you get a BR19 form, everybody can do it, I mean anybody who's interested to know how much state pension they might be able to expect to receive can ask for this form and the government will send it to you, it takes up to 40 days but it's usually quicker than that.

Newshost:
Martin from England: "What measures will there be to stop the government pulling a bait and switch where a carrot's dangled to taxpayers enticing them to put their hard earned money into a one-way pension scheme but where it's a prime target for a future government raid?"

Ros Altmann:
That's one of the problems that we've had with pension policy and what I'd like to see, if we can get a sustainable framework to move forward, is that all parties agree that it will not be touched for say 20 years, that we can't change it. People do need certainty and they're fed up with all the changes. We've had tinkering and tinkering with the system and what we need is to actually get a sensible system going forward and then all politicians have to promise not to change it.

Newshost:
But did you feel that today's statement clarified, simplified enough, gave enough incentives, put enough protection - what's your sort of conclusion about what we've heard?

Ros Altmann:
I would love to say yes this is great, it's done all the right things, I think on the work side, as I say, encouraging people to work longer and making it easy for them to work longer - yes I think these are great measures. But in terms of getting people to put more money into pensions I think we've missed the mark.

Newshost:
Sarah writes to us: "I'm very concerned about my pension provisions, unfortunately I just don't earn enough to put anything into a pension plan after I've paid my other outgoings, such as mortgage and utility bills, I have no wish to work until I'm 60 and would like to do something about it. Is it worth my while just putting �10 or so away each month into a pension plan?"

Ros Altmann:
Again I can't give you independent advice but if you're only saving a small amount you might be better off starting off with an ISA. You don't get the tax relief on the way in but you're not taxed as the fund accumulates and you're also not taxed when you withdraw it, whereas a pension is taxed when you withdraw it. And if you find that you're entitled to means tested benefits when you come to retire then an ISA you can just cash it out and spend it and it won't in any way harm your entitlement to means testing, whereas with the pension credit the pension you can't do that and therefore it will harm your entitlement.

Newshost:
A sort of philosophical point from R. Slade in West Sussex: "Pensions are not gifts, they're earned possessions under the Human Rights Act and should be treated accordingly. Under cunningly disguised wording this fundamental principle is contravened." What do you make of that to finish?

Ros Altmann:
I think that they've got a point actually. For example, with employers' schemes where people lose their pension right when the employer goes bust there's no other place where you can ask someone to do some work for you, promise that you're going to pay them say a �100 now and �50 when they finish the job, they finish the job and then suddenly you say well actually sorry I'm only going to pay you �20 and there's no redress, no recourse, there's nothing you can do about it, it would be completely legal. That's the situation when schemes either go bust or even when the employer chooses to wind up his final salary scheme - it can't be right, we've got to change that.

Newshost:
Okay, Dr Ros Altmann thank you very much indeed for answering our questions and thanks to you for sending and e-mailing your questions to us. I'm Susanna Reid, I'm afraid that's all we have time for goodbye.