UK - Britain's pension provision has never been more unaffordable and this generation faces being less well-off in retirement than their parents, the Conservatives warn.
Hammond said there was a major governance challenge ahead for individual institutions and claimed too much focus had been on regulatory failure.
He said: "Britain is not prepared to weather the storm we are heading into. In fact, we are in a worse position than any other major developed economy and are set to have the largest reduction in growth of any of the G7 nations next year."
He warned the immediate impacts were going to be on deficits, and said the UK now had around £110bn (US$171bn) of aggregate deficit.
"This is going to be a real challenge for the government and the Pensions Regulator."
Hammond also explained the government had to have a sensitive response to dealing with the growing pension deficits and said it had almost "destroyed the goose that lays the golden eggs".
He said the savings ratio had dropped from 10% in 1997 to less than 1% now, and noted that as soon as the immediate squeeze on individual's living standards was resolved, the UK should see a higher level of savings.
However, Hammond was not confident this solution would manifest itself as an increase in long-term savings activity.
"I suspect that the huge loss of confidence in financial institutions generally, is going to be a major problem for the pensions industry for years to come," he said.
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