IN unveiling its plans for new "stakeholder" pensions, the government has begun to address one of the biggest problems facing society - that of the day when the state can no longer afford to provide for everyone in their old age.

It is a crunch that is looming as the proportion of older people in the population rises relentlessly and the proportion of contributors to the welfare system shrinks along with the number of years they work.

In short, the state pension kitty will eventually not be big enough to deliver even basic support for those drawing from it.

But, oblivious to this and of whether they will have enough to live on when they stop work, millions of people still make no personal provision for their later years and carry on assuming that the state safety net will always be there.

In setting out to encourage more self-help - and, at the same time, develop welfare reforms that attack the baleful dependency culture that has developed in large swathes of society alongside the benefits system - the government has taken an astute step by providing new and real incentives that should encourage far more to start saving earlier to ensure they do not end up as poverty pensioners.

For this radical move to develop a system of individuals' stakeholder pensions, starting in 2001, will allow everyone to put aside up to £3,600 a year tax free in the scheme - with the Chancellor, in effect, giving them 22p of every pound they accumulate. But the gem in this scheme is that it really does include everyone - whether or not they are working.

At a stroke, it will help millions of women who give up work to start a family and at present abandon whatever personal provisions they have or, indeed, fail to make any.

Best of all, it will enable children to have a pension plan even from infancy, and with their tax-free nest-egg growing as they grow it should plunge millions into a new culture of self-help and social responsibility at the outset of their lives.

Not all, of course, will be able to put up to £2,808 a year into their stakeholder plan in order to get the taxman's gift of £792 - but there will be a clear and visible incentive for more people to do more to provide for themselves and for the millions unwisely doing nothing to at least do something.

It could defuse the demographic time-bomb that is set to shatter the state pension scheme for the next generation and curb the widespread dangerous complacency among millions about how they will manage when they grow old.

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