London Briefing/ Chris Johns: With its highly developed pension industry, Britain has long been at the leading edge of the savings business.

A high proportion of British people have a private, company-based pension scheme that removes much of the burden from the state. In France, Germany and Italy, for example, private pension schemes are the exception. Nevertheless, Britain is trying to persuade more people to take out a private pension.

Many company-based schemes are in trouble: the Confederation of British Industry (CBI) warned this week that there was a £160 billion sterling (€226 billion) pension deficit faced by British companies. Most people assume the black hole has arisen because of the crash in share prices over the past three years - that is partly true but it is also because many private schemes are not run very well. But, compared with much of Europe, Britain is in good shape. If the UK has problems, other countries have looming disasters.

There are several aspects of the pension debate that bother me. These concerns are not necessarily UK specific. For example, the Economic and Social Research Institute's recent medium-term review hinted that Irish taxpayers were being ripped off in at least three ways.

First, workers are paying for the pensions of the current generation of retired people. Second, unlike previous generations, workers are being forced to save for their own retirement. Third, they are suffering from a two-way infrastructure deficit: the previous generation bequeathed too little infrastructure and the current population is having to put up with the costs and side effects of infrastructure spending that will mostly benefit future generations. Similar points could be made about the UK and elsewhere.

People in the UK, Ireland and many other countries are being told to save more for retirement. This global rallying call for everyone to plan for old age sounds eminently sensible but it is not without risk. Economist John Maynard Keynes pointed out long ago that a rise in the saving rate could be self-defeating. If everyone stops spending in order to save then incomes fall - one person's spending is another's income - reducing the ability to save and so on.

It might sound odd to warn that we can save too much. But it can happen.

Pensions exist so that retired people can receive an income. That income allows them to buy the goods and services they need. But when we strip this process down to its bare essentials we observe two types of individual. First, there is the worker who produces and consumes goods and services. Second, there is the pensioner who only consumes.

The system works when there is a balance between the working and non-working sections of the population. The system is balanced when there are not "too many" pensioners consuming for "too long".

It doesn't really matter how much the pensioner has saved. Saving, whether in the form of cash or shares, is a mechanism through which we lay claim to the future production of somebody else's output. If significant numbers of people come to regard this contract as intrinsically unfair there will be a revolt. And that perception of unfairness will arise if younger people come to see themselves as supplying the needs of too many "unproductive" pensioners.

And with projections suggesting that in some countries there will, relatively soon, be one pensioner being supported by one worker we can be confident that that pensioner will be poor.

Pensioners will point out that they have worked hard and saved hard for a poverty-free retirement. Their savings represent a legal claim on future output of goods and services. At the individual level this is right and proper. But it only works at the individual level. Somebody has to produce the goods and services that we all hope to consume when we retire. But will future generations of workers honour our ever-increasing claims?

There is only one solution to the pension crisis: a rise the retirement age.