IT is nearly 100 years since Britain first embraced the idea of pensions for all, with David Lloyd George’s Old Age Pensions Act of 1908. The new pensions were not exactly generous, payable only at age 70 and worth between one shilling (5p) and five shillings a week.

For comparison, a shilling in 1908 was equivalent to just over £4 now. Anybody back then with a retirement income of more than 12 shillings a week was ineligible, the new pension being means-tested. Even so, it was greeted with great enthusiasm. On January 1, 1909, when the first pensions were paid, there were street parties, fireworks and brass- band concerts across the country.

I cannot promise that when Adair Turner (now Lord Turner of Ecchinswell, which sounds like Dickens’s Eatanswill), reports this week it will provoke parties and fireworks. But in its way, the final report of his Pension Commission could be as important for pensions in the 21st century as Lloyd George was in the 20th century.

I use the word “could” advisedly. The government appears to be doing its best to scupper Turner’s proposals before they are published. Gordon Brown is doing so on the grounds of expense and their tax implications but also because they would be a break with his own approach, that of means-tested credits. Turner’s proposals for later retirement were holed below the waterline by Alan Johnson, the trade and industry secretary, when he agreed to a dodgy deal with the unions for existing public-sector workers to continue to retire at 60, although that may be revisited.

Having said that, let me sketch out briefly what we can expect from Turner and then try to answer some questions about his proposals. It seems certain there are two things we will not get — compulsory pension contributions and an admission that the commission may have got it wrong about the inadequacy of pensions saving.

In September, addressing the Trades Union Congress, Turner listed the disadvantages of compulsion, either applied to employers or employees. Barring a Damascene conversion on the road to Wednesday’s report, we should assume he has not been persuaded otherwise.

If the leaks are correct, however, there will be something that many businesses will find uncomfortably close to compulsion. This is the proposal for a British version of New Zealand’s “Kiwisaver” scheme. “Britsaver”, to which all staff would automatically belong (so the onus would be on them to opt out) might work on the basis of 4% of salary contributions from staff, 3% from employers and 1% from government.

Most business groups are opposed. The drawback, from their perspective, is that unless their employees choose to opt out, they will be forced to contribute. Turner will insist this falls short of true compulsion.

If outright compulsion will be rejected, so will the charge that Britain does not face much of a pensions problem. The commission has been attacked, since its first report in October last year, for overegging it. Central to this is the question of whether, as a nation, we save enough.

One argument, put forward by Tim Congdon, formerly of Lombard Street Research, is that because the cost of capital equipment is dropping (falling prices for computer and IT equipment), Britain needs to save less to maintain its productive base. Therefore, the halving of the savings ratio in recent years is not necessarily a problem in terms of the economy’s ability to generate the wealth pensioners will draw on. ()

This, it seems, will be rejected. However you cut the figures, the commission will say, we are facing a significant savings gap.

As for what Turner will recommend, it seems certain he will grasp the nettle of later retirement, with eligibility for the basic state pension rising to 67 (from 65) by 2030, and after that increasing by roughly a year a decade, in line with rising longevity. He will also recommend — and this is where he runs up against Brown — a more generous state pension, and one that rises in line with earnings rather than prices.

Now let me turn to a couple of those questions. The first is, why do we need a basic state pension at all? The basic state pension is £82.05 a week, £4,267 a year. Average (mean) male annual full-time earnings are £29,600. For some retired people the basic state pension is a matter of life and death.

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