Pensions: we have to work longer and save more When it comes to occupational pensions, we have three problems to solve. First, not enough people are saving for their retirement. Second, those who are saving are not saving enough. And finally, our public service pensions are not on a sustainable financial foundation. The new National Employment Savings Trust (NEST) and automatic enrolment should help us address the twin problems of too few people saving too little for their retirement. This will take time to bring about the necessary change in direction towards a new savings culture and should be a national strategic priority. Our public service pensions are a fundamental part of our national savings infrastructure. So it is vital that the long-term finances of these schemes are sorted out. Most people in the public sector are saving for their retirement, but not enough to provide for the extra years they are living - and the taxpayer has been making up the difference. These costs are set to go on rising over the next decade at least and without further additional reform may not get back into a more sustainable balance for the next 40 or 50 years. But we should not wait that long - and there is a way to do this without slashing the value of pension benefits to retired public service employees. This, too, will require a new way of thinking, where working longer and paying a bit more towards the pensions we expect becomes hard-wired into our approach. I cannot see any other way to avoid a race to the bottom that would impoverish millions of public servants and drive up welfare bills. The health and care system faces an equally daunting challenge and there are specific policies we can pursue that will steer us in the right direction. The recent report of the Dilnot Commission offers the prospect of a new partnership between the state and individuals to share the burden of costs and encourage the provision of new sustainable insurance-based financial products and services covering the provision of long-term care financing. But while these are difficult challenges, we must not be pessimistic about the consequences of an ageing population or we will miss one very important fact: older people play a vital role in the health and well-being of our country and our society. Grandparents make an increasingly valuable contribution to child care and many who give informal support to others in need are themselves older people. It has been estimated that the value of this care is the equivalent of £90 billion of public spending. That is massively important to society's well-being. Older people also provide the greatest number of volunteers, who help enrich communities and create a real sense of value in our society. And finally, we ignore the experience and wisdom of older people at our peril. Lord Hutton of Furness is a former Secretary of State for Work and Pensions. This is an edited version of an essay from 'The Next 10 Years," to be published by Reform on March 1