The political log jam on pensions has been broken. That is the most immediate consequence of the Tory Party’s new pension proposals.

All the major pension players – except for the Government – are now agreed that no long-term successful reform of pensions can take place without the state putting into place what is called an adequate first tier pension. The state putting into place, and running such a pension scheme itself, are of course two separate issues which now need to be clearly distinguished in the debate.

Similarly everybody now knows that the Government’s pension strategy is in deep crisis – that is everybody except the Government. And many Government members must privately know that their strategy is not only leading nowhere, but harming long-term pension provision.

This is where the Tory proposals change the debate. At their recent party conference the Tories made a string of proposals all of which (except their daft ideas on NHS reform) I would hope the Government will steal before the next election.

Even though they are now owners of a number of attractive policies the Tories remain unelectable against a Government which is now deeply unpopular. As a result the next election will see a record low turnout. Yet politicians have been slow to appreciate the possible outcome of a 55 per cent poll.

Here is the only opportunity open to the Tories. At the last election those over 45 accounted for only 40 per cent of the electorate but they amounted to 60 per cent of those who voted. At the next election voters aged over 55 will constitute the majority of voters. Pensions will with this group feature disproportionately in the choice they make.

Linking the state retirement pension to earnings is only one move in giving the Tories a coherent pension reform programme and an edge with those who will vote come hell or high water. Stage two of a reform must be to ensure that the current system is built upon so that everybody who is eligible receives a generous enough first tier pension to take them off means-tests.

There are two major proposals on the stocks to achieve this objective. The NAPF and IPPR, for example, argue for a huge hike in today’s pay- as-you-go scheme to be paid for by abolishing the national insurance contracted out rebate. My worry with this proposal is that it could bring down around our ears the whole occupational pension scheme.

The other proposal comes from the Pensions Reform Group, of which I am a member, and advocates the building up of a funded scheme which combines with the current pay-as-you-go pension to form this adequate first tier.

It has advantages over the NAPF’s proposals (but I would say that wouldn’t I?) in that it leaves the rebate operating for company schemes. But by advocating a workable long-term reform it will take an increasing pressure off company schemes. The Universal Protected Pension, the Group’s proposal, also puts an end date to means-testing and particularly the pension credit.

Step forward Andrew Smith who is far and away the best Secretary of State since Peter Lilley even though he has been landed with unworkable proposals from his predecessor. It is clear that Andrew appreciates how vulnerable on pensions Labour is likely to become.

Was it this pressure which made him announce before the details were worked out the Government’s new scheme to persuade workers to retire at 70? Read Andrew’s words. There is nothing there about remaining at work until 70 just not drawing the state pension. So those with adequate occupational pensions will opt for the scheme even though they have ceased working. Had this group drawn their pension at 65 they would have paid tax, possibly the higher rate on it. So will the new payment be tax free?

Unless the Government radically refines this little reform to insist that people do work until 70 and that the sum is taxed, Andrew’s premature announcement will result in a scheme benefiting most the richest pensioners.