The case for pension reform is obvious enough. Among the statistics that leap off the pages of the White Paper published yesterday, Security in Retirement: towards a new pensions system, are the following: in 1950, a 65-year-old man had an average of 11 years left to live; today he has 20 years; in 2050, he will have 24. In 1950 there were four working people for every pensioner; by 2050 there will be barely more than one. Such figures describe great social advances, but they come at a price, and it would be a spectacularly heavy cost if government ignored demographic trends.

Even with the proposed changes, the future looks expensive. The White Paper’s prizes include a basic state pension worth double in 45 years what it is today, once its value has been relinked to average earnings. The proposal to recognise an individual’s social contributions, so that those who take time out of work to care for relatives are not penalised with lower pensions, is a significant and welcome advance for women, as is simplifying the qualification for a full basic state pension. Reducing means-testing in order to encourage more saving is a reform in the right direction. But there is a considerable cost. By 2050 funding the changes will require an extra 1.5 per cent of national output, about £84 billion at today’s prices. This is only a price worth paying if it is matched by two further changes.

Most urgent is the need to revisit the spineless deal that ministers cooked up with unions under which serving public sector employees can continue to retire at 60. Although the egregious accord is yet young, today’s White Paper, by example, should make it easier to bury. No private sector employee under 47 will be affected. It is today’s school leavers who will retire at 68, by which time doing so will seem entirely natural. Indeed, one of the attributes of the current pensions debate is the public acceptance that improved pensions require longer working lives. So to treat public and private employees so differently is nonsensical. Alistair Darling has been at the Department of Trade and Industry less than three weeks. The need to reopen negotiations on the issue must be a priority.

The other change without which yesterday’s proposals will prove untenable concerns employers. The White Paper’s great innovation, the new personal accounts that are designed to improve saving, are a neat vehicle. “Soft compulsion” is a clever prompt to the lazy, the easily baffled or the irresponsible. The aim is to promote a savings habit, from which future wealthier retirements largely will be funded. Employees will give 4 per cent of a slice of their earnings, and the Treasury 1 per cent. Employers, who are already stretched, are down for 3 per cent. This is a considerable sum for companies to find, even if it is to be phased in. Many will rightly feel squeezed. Unless matched by a cut in corporate tax rates, it will be unjust, and there will be fewer jobs created.

The White Paper, if not revolutionary, marks a notable milestone, and not only because its production required Tony Blair and Gordon Brown to communicate and compromise. Combined with the passage of the Education and Inspection Bill, the White Paper gives Mr Blair a riposte to those who insist he is a lame duck. But he must ensure that further changes are made to the corporate environment and to public sector benefits, otherwise pension reform will fade into insignificance.