An important point barely touched on by Adair Turner in his Pensions Commission Report is the fact that incentives to encourage people to save for retirement will fail as long as individuals do not trust the savings institutions. And they don't.
Research from the Consumers' Association shows that this is an enormous hurdle for the industry to overcome, with only one in three prepared to believe that financial institutions are not about to rip them off.
The National Consumer Council makes a similar point, saying that the Commission's three-pronged approach to future pensions policy is missing one vital ingredient – tackling the massive mistrust that will undermine any attempt to close the reported £57bn savings gap.
NCC research shows that the problem of trust extends to young and old alike and that gap includes the Government and employers, not just the pension and investment industry.
If the industry does not get its act together, it is in danger of finding itself overtaken by events. Just as the supermarkets, not oil companies, are now the biggest retailers of petrol, the traditional savings institutions could find themselves second best in the battle for investors' money.
A typical example is the recent launch of Sainbury Bank's new SaveBack scheme, due to be rolled out at 452 Sainsbury's stores. Convenience is at least 50 per cent of the battle when you are trying to sell someone a financial product and Sainsbury's SaveBack account deals with this problem brilliantly. Customers simply put money into their savings account by 'swiping' their debit card at the checkout till – similar to the way they can take money from their current accounts with Cashback.
In launching this product Sainsbury's Bank has highlighted an important aspect in the challenge to close the savings gap. What is needed is not necessarily development of new products, but ways to make it easier for people to save. Research from Sainsbury's indicates that around 12 million people would use a savings account like SaveBack if it were available in their local supermarket.
Of those who would use this type of service, 61 per cent said it was because of its convenience. One in two said that because they visited their supermarket on a regular basis they would be more likely to save, and 29 per cent said they would save more because of the trust they had in their supermarket.
With almost half the nation's household shopping budgets being spent at supermarkets, this last point in particular ought to worry the life out of high street banks and other savings institutions.
Anyone in the business knows that Sainsbury's Bank is a joint venture with HBOS. But the customers don't know it and it is the Sainsbury's brand that is the seller. In fairness to HBOS, it is also a trusted name, but you can't get your groceries and petrol at Halifax or Bank of Scotland branches.
Moreover, the Consumers' Association research shows that what people want from their savings – whether it's a pension or not – is security and a guarantee that what they put in they will get back.
They are prepared to forego the potentially higher returns on equity-based products for the security of cash deposits. If Sainbury's offered a pension wrapper to its SaveBack account, with the tax relief automatically granted, so that every £10 paid in automatically became £12.20 saved – and people could see it in their account – there is little doubt that more people could be persuaded to save for their retirement.
One of the serious omissions of the pensions industry is that there is no easily available pensions deposit account, which is exactly what the public is telling us it wants.
This is why the Government urgently needs to review the tax incentives given on pension savings ahead of the Pensions Commissions recommendations next autumn.
Much has been written about BOGOF – buy one get one free – and the Treasury should give this concept serious consideration. Why should the better off half of the population be the only ones to enjoy the tax subsidy given to pension savings, estimated at some £20bn a year?
If this were spread between the 28 million adults of working age, it would give everyone the opportunity to save £700 a year, with the Treasury contributing £700 a year per person. Who could resist the prospect of doubling their savings for doing nothing?