Business Editor: Portable pensions will make it worth working till 67

Compelling people, even softly, to stick to company plans is archaic

At a meeting in this office on Friday, a colleague said everybody was outraged at the prospect of having to work until they were 67. But he was in a minority of one. Everyone else thought that the Turner Commission's leaked proposals sounded eminently reasonable if they helped secure our pensions.

More relevant was a statistic thrown out at a company where a friend works - that a third of employees had not joined the pension scheme. This is a marketing group where staff are educated and well read - but also are young so they think retirement is a long, long way off.

The tabloid press might get hot under the collar about the foul-tasting medicine Adair Turner is due to serve up when his report is formally published next week. But most of us realise that it has to taste bad to do some good.

More contentious is the issue of forcing people to pay into a pension scheme - be it a company fund or a personal pension. Lord Turner's team is said to be in favour of soft compulsion (an odd phrase, a bit like "limited nuclear strike"). This means you are enrolled into your employer's pension fund when you join the company, and have to actively opt out.

Soft compulsion uses the power of inertia to make people save. But it falls down if there are problems with the company scheme. And I can see many problems on the horizon for many company schemes.

As it currently stands, the trustees are the people who ensure that the scheme is solvent, is well supported by the company and is investing in the right things. But who are these trustees? Typically they are a mix of staff and managers, all of them giving up time for little reward and potentially exposing themselves to litigation if things go wrong. They often have little training, and scant knowledge of the complex financial instruments fund managers use to maximise returns for pension schemes. Many experts argue that having a finance director or financial controller as a trustee creates a conflict of interest, as high payments into the pension fund would not always be good for the company.

With such problems, it is hardly amazing that pension schemes rely on actuarial advice. Yet the pool of advisers they can call upon is limited - and these advisers wield astonishing power.

I've long held the belief that the company pension scheme is an anachronism. Companies are not in the business of running pension funds - they should leave that to the professionals. Companies and employees should be given a minimum level to pay into a personal pension. This would get rid of the cumbersome structure of unprofessional trustees, make pensions portable and encourage the development of low-cost schemes.

Some companies are already doing this - including ours. No wonder my colleagues are happy to work until they are 67.

RUBBISH ON THE LINE

Being a boss used to mean never having to say you were sorry. But that has changed. This week has seen the big cheeses at two of the world's largest telecoms companies eating humble pie in front of their investors.

Arun Sarin at Vodafone was stung by the markdown of the mobile phone operator's shares on Tuesday, when it admitted it wasn't as good at avoiding taxes as it had promised. Investors were spooked by a £5bn tax bill looming over the next three years.

Meanwhile, Santiago Fernandez Valbuena, the chief financial officer of Telefonica, said sorry for misleading investors over whether the company might bid for O ₂. In September the Spanish giant claimed the British mobile phone group would not fit into its strategy - yet six weeks later it agreed a £17.7bn takeover.

While Mr Sarin might be guilty of an error of omission, Mr Valbuena and his chums actively misled investors, potentially causing a false market in both Telefonica and O ₂ shares. As Telefonica has a UK listing, the Financial Services Authority should throw the (phone) book at it.

j.nisse@independent.co.uk