"The plain truth is that we are in the midst of a financial literacy crisis." So warned Arthur Levitt, chairman of the United States Securities and Exchanges Commission, the regulator of the world's largest financial markets. He was not just talking about day trading of stocks. The warning was in the context of the long-term movement towards individual responsibility for personal financial security.

Ireland is some distance behind the US in this trend. But our movement is in the same direction. The concept of a job for life with steady, if unspectacular, prospects for promotion and earnings increases is gone for entrants to the labour market.

The area where this has the clearest impact financially is in pensions provision. Individuals have to make sure they save enough to accumulate pension benefits over and above the State pension. Defined benefit pensions, which guarantee a pension of as much as two-thirds of final salary for 40 years' service are difficult to replicate by personal savings.

In 1998, there were 414,000 members of these schemes, half in the public sector.

These people's pension entitlements are very valuable financially. All the more so, since the trend is away from this type of pension. Although they contribute to their pension to some degree, such employees own an entitlement to a level of retirement income which another party - the employer in the private sector and the Exchequer for the public sector - is obliged to deliver. New defined benefit schemes are rare. Of the 9,607 new pensions schemes registered with the Pensions Board in 1998, only 1 per cent were defined benefit. Between 1997 and 1998, there was a reduction in the number of people covered by defined benefit schemes. Defined contribution schemes, which pay out a pension based on how much the employee and employer together pay in, are now much more common.

In this context, day trading of shares and speculation on the foreign exchange markets using a home PC is very frothy stuff. It is not the meat and potatoes of personal financial responsibility. As the SEC chairman said in April in relation to stock markets, "with so much focus on what's sizzling and fizzling, basic information about saving and investing gets lost".

"As more and more of us must take responsibility for our own retirement needs, we have had to jump from the passenger seat to the driver's seat. But many have had to make the switch without the benefit of time behind the wheel."

Echoing the Republic's recent experience, particularly in relation to the Telecom flotation, he said, "we've seen a dramatic transformation in how and where Americans save and invest. At the same time, an unacceptably wide gap has grown between financial knowledge and financial responsibilities. And that gap spells trouble for many Americans".

If that is so for Americans, it is surely also the case for the Irish.

Levitt drew a comparison from sport. "While 63 per cent know the difference between a halfback and a quarterback, only 12 per cent know the difference between a load and no-load mutual fund." I doubt if even as many as 12 per cent of people in the Republic know the difference between a load and no-load fund, especially since the concept of disclosure of fees in savings products is only in its infancy.

I don't expect that most Irish savers would have any view at all on the likely increase in the ISEQ over the next decade. In the US, Levitt bemoaned, most mutual fund investors thought that the stock market would gain an annual average of 20 per cent over the next 10 years, putting the Dow Jones at more than 50,000 then.

Levitt's view was that the media has a large role to play in redressing the crisis in financial literacy. He also claimed that the SEC is doing its bit. With 50 other agencies and groups, it organised a "Facts on Savings and Investing Campaign". Some of the plain-speaking financial planning tools delivered in the campaign include a "Ballpark Estimate" to help people calculate how much they should save. An Internet calculator for young people was developed, said Levitt, "to show how a $75 pair of sneakers could cost $4,700 - that's how much a 13-year-old could save by retirement by investing the $75 instead of spending it". The SEC launched a Mutual Fund Cost Calculator on its website to allow investors see how different mutual funds costs could add up over time.

These are imaginative steps being taken by probably the most sophisticated regulator in the world. As the Republic's system of financial regulation faces a re-design, our own regulators and policymakers would do well to adopt the same approach, since the same deficit of financial literacy confronts us too.

Oliver O'Connor is managing editor, Fintel Publications