And so it seems final salary pension schemes are in their final throes. According to research from the National Association of Pension Funds, more and more companies are looking to close down their schemes. In fact, according to a survey it produced, 25 out of 100 firms that replied to its survey expect to do so.

It is not difficult to see why. Firstly, we are all getting older. Within a few years there will be more people reaching 65, than indigenous workers entering the labour force. Meeting the needs of future pensioners is set to become a lot harder.

Secondly, the stock market performance of the last ten years has been awful.

And this presents one of the key issues today. If we are not careful, the pension time bomb could send the UK into years of lacklustre economic performance – in fact, maybe the real cause for Japan’s dismal performance over the last twenty years was simply that its own demographic problem was further advanced than in the UK. The rather gloomy implication of this, of course, is that the UK is set to experience a similar period of gloom. For that matter, so is the rest of Europe, including Russia which also has its own problems with an ageing population.

But maybe there is a way out. It doesn’t have to be so disastrous, and this brings us right back to the credit crunch, and the here and now.

You may have spotted there is a savings dilemma emerging. We all want to save more when times are difficult, so that in the event that things get even worse, we can still get by. And thanks to that ticking pension time bomb, we all need to save more for our retirement too, especially as we can no longer rely on using our home as a pension. Clearly, this also means we need to repay debts.

And yet, as Keynes showed, in a recession, the last thing you want is for people to save more. Then there’s debt inflation.  If inflation goes negative, then in real terms, debt grows. If we then try to repay debt, total demand falls, and prices are likely to fall even further. The great classical economist Irving Fisher, once said: “The very effort of individuals to lessen their burden of debts increases it, because of the mass effect of the stampede to liquidate in swelling each dollar owed. Then we have the great paradox which, I submit, is the chief secret of most, if not all, great depressions: the more debtors pay, the more they owe.”

So, on one hand we all need to save more, on the other hand, Britain needs us to spend more.

Ultimately, however, the level of our savings is not the point. It is what we do with our savings that counts. You can’t eat money, you can’t wear it (at least, a coat made of five pound notes wouldn’t be very warm, and a shirt made of pound coins would surely rattle), and you can’t bury it in the ground either, in the hope it will grow. Actually, what really determines how wealthy we are, is how much we produce. If the UK sees a fall in the number of people producing, and a rise in the number of people retired, then it is irrelevant how much money we have saved. The only way we can afford to maintain living standards is if somehow productivity has risen, or we have invested money abroad.

Savings in itself does nothing.

Some people argue that banks need their customers to save more, in order to rebuild liquidity. But that argument is wrong. It is irrelevant whether people save or spend, the money still finds its way into banks.

So, contrary to popular opinion, business lending, which in turn will feed investment, does not require more savings.

However, there is another point.

Economists fall into the trap of seeing investment as determined by borrowing levels. But, as we all know, borrowing is not the only way for a company to fund investment. It can instead give equity for money, and then pay shareholders a share of future profits in return for their money.

The real way forward then is not so much for those who are worried about their retirement to put money on deposit, but to really invest it.

This morning, in the Telegraph, Tom Stevenson made a telling point. Since 1871 there have been 32 ten-year periods in which the US stock market recorded a negative annual total return. Each of these ten-year periods was followed by a ten-year period of growth.

If money is invested into companies, which then in turn invest this money, then the UK is still enjoying a boost. Investment, as well as consumption, makes up GDP.

It is possible to meet the challenge of the retiring baby boomers without causing a slowdown in the economy, but only if the money that we hope will make up our pensions is invested into companies that will in turn use this money to improve productivity via innovation.

The problem is that people tend to invest money at the top of a boom, and sell at the bottom. The sensible course is the other way round.

Right now, the UK needs its future pensioners to plough money into UK shares, and maybe even into venture capital firms. The government needs to do all it can to encourage this. But it is swimming against the tide. Sentiment has turned against risk when, actually, now is the time when risk is what is required.