Leading article: Sensible reforms and the need for equality

Speculation about the final proposals of Lord Turner's Pensions Commission has been rife for weeks. And the account in yesterday's Financial Times of its conclusions bears all the hallmarks of kite-flying. Where so contentious an issue as pensions reform is concerned, however, testing the public response in advance has much to recommend it.

If the details are correct - and the Pensions Commission has not denied them - everyone now under 50 would have to work two years longer for a state pension around 25 per cent higher than at present. A national pension savings scheme would also be introduced on an opt-out, rather than opt-in, basis, modelled on a scheme introduced in New Zealand.

A longer working life will hardly be a popular solution to the crisis in pensions funding that looms. We have all become used to the idea of earlier retirement, and a pensionable age of 67 will seem at least two years too long to many. With the sweetener of a higher standard amount, however, it must be deemed both inevitable and sensible. With life expectancy so much higher now than it was when the present pension age was set, and the shift from heavy manual labour to clerical and service jobs, there is no rational argument for rejecting it.

The introduction of an opt-out national savings scheme is also a reasonable compromise between compulsory saving and the present system. A compulsory scheme would be tantamount to an additional tax and an undesirable curb on personal choice. What we have at present, however, is the worst of almost every world. Private pension provision has proved unreliable because of the poor performance of the stock market and the high charges levied by the companies; pension funds were penalised by the Chancellor's decision to tax them, while low interest rates have discouraged personal saving.

A government-backed savings scheme should allow people to plan with more confidence for their retirement than the present system, which is piecemeal, complex and - worst of all - unpredictable. For those paying into pension schemes of whatever variety today, the projected pension seems to bear less and less relation to what has been paid in. It is no wonder so many are giving up on it. This has to change.

The Turner recommendations have the virtue of simplicity and transparency. And the Government would surely be able to "sell" them to a public increasingly concerned about provision for life after work - were it not for two things. The first is the difficulty many older people face in finding work. The statutory ban on age discrimination that comes into effect next year may help to change attitudes among employers, but ways have to be found of permitting older people to keep their jobs without reducing the recruitment and prospects of the young. It will not be an easy balance to draw.

The second is the vexed question of the public sector. Private-sector workers will quite justifiably revolt if they are required to work to 67 for a state pension while public-sector workers retire at 60 with pensions that are often more generous than theirs. The Government's recent agreement with public-sector trade unions to raise the pension age to 65 only for new employees at a time when both staff and salaries in the public sector are rising faster than outside undermines the whole argument for pensions reform. It cannot be sustained.

However reasonable the proposals for pensions reform turn out to be when they are officially published in two weeks' time, they will be unacceptable unless everyone, whether in the public or private sector or self-employed, is required to share the pain.