Forcing people to work longer isn't the answer to the pensions crisis. The real alternative may well be a new, flexible approach to retirement that both transforms the experience of old age and brings ‘ripple down’ benefits for future generations of younger workers.

This new concept of ‘liquid lives’ forms the conclusion of a two-year research project into the future of retirement, conducted by the Tomorrow Project and published today by the Chartered Institute of Personnel and Development (CIPD).

Learning, housing and retirement income could all be unified in a grand plan that allows people to mix and match work, pleasure and learning throughout their lives.

The project's report, ‘The Opportunity of a Lifetime - Reshaping Retirement’ is based on consultations with 90 experts in labour market, pensions and savings issues and a series of focus groups.

The research revealed grave doubts in the Government's ability to provide an adequate state pension, low levels of trust in the financial services industry and strong opposition to the means testing of pensions. However, the report concludes that the solution is an entirely new approach to retirement.

As Britain's demographics have changed, people have moved from entering work aged 15, working for 50 years and dying on average ten years later, to a situation where most start working at 18, work for 47 years and survive in retirement for 20 years. The report starts from the premise that, as these trends continue, this is unsustainable, and presents two alternative views of the future:

Delayed retirement

• The retirement age is increased to avoid a meltdown in government and pension fund finances - probably to around 70.
• Not only do people resent the increased retirement age, but the change does nothing to change views of retirement.

Reshaped retirement – liquid lives

• Retirement is no longer a distinct phase of life. People mix and match work, extended leisure and learning throughout their lives.
• As people continue in part-time work after the 'traditional' retirement age, making the best of more leisure time and decent incomes, the rest of the population begins to look at older people in a new and more positive light.
• Traditional approaches to career development change. Rather than being stuck in an unfulfilling career by the fear of impending retirement, people feel able to change career into their fifties and beyond.
• The need to adapt working patterns to become more flexible for older people has a positive knock-on effect for the terms and conditions of younger workers - not least because people at the top have one eye on their own future flexible working needs.
• The increased supply of older, more experienced workers helps to address skills shortages, benefiting the national economy.

Michael Moynagh, co-author of the report, said: "Working lives are being squeezed from both ends.”

“People are retiring later and staying in education longer than they were before. The question for the future is how we are going to deal with this. The answer doesn't lie in postponing retirement and forcing people to work longer. What we need is greater flexibility, a better state pension, and more attractive systems for saving - so that people can make their own decisions about when and how to stop working."

The report sets out steps that would help achieve reshaped retirement, including:

• New patterns of work, enabling skills shortages to be met by older workers on reduced hours, rather than simply raising the retirement age and allowing age discrimination to persist.
• Major reform to the state pension, with a single state pension set at a level above the poverty line and paid from a 'central' pension age of 70, with the flexibility to take a lower pension earlier, or a higher pension later than this age. This is an alternative to simply raising the state pension age, which would involve less change but entrench inflexibility in the retirement system.
• A radical new approach to savings, taking a whole life approach, based on a new Lifetime Savings Account - which would use government match funding and other incentives to create a single vehicle to fund the purchase of three individual assets - learning, housing and retirement income. This would be an alternative to increasing the use of compulsion to force greater contributions to traditional pension schemes.