The nation’s political leaders finally caught up to the modern realities of saving for retirement by adopting comprehensive pension-reform legislation. Congress passed a bill two weeks ago. President Bush signed it on Thursday.

The bill forces companies to stop the accounting tricks that allowed them to declare their traditional pensions “fully funded” when they clearly were not. The government estimated that these defined benefit plans are underfunded by a very scary $450 billion.

The law gives most companies seven years to catch up. Those with seriously underfunded pensions must make up ground faster. In a nod to a struggling industry, airlines are given 10 years; those in bankruptcy have 17 years.

The stricter rules will no doubt cause more companies to dump their defined benefit plans or freeze them for new workers. But that trend was established long ago, and there’s really no stopping it. In 1985, there were 112,000 companies offering traditional pensions. Now there are only 30,000.

Defined contribution plans, better known as 401(k)s, are the present and future of retirement planning in the United States. They are more suited to workers who will change employers many times and need portability in their nest eggs.

The new law reflects this reality by making permanent the higher contribution limits that would have expired in 2011. Another important improvement is that starting in 2008 employers can automatically enroll workers in 401(k) plans. Turned off by the paperwork hassles, many young workers fail to sign up. They’ll still have control over how much is contributed, but this simple change to encourage participation is expected to net an additional $10 billion to $15 billion a year for workers in retirement savings.

The country desperately needs pension reform, because the specter of a huge government bailout is looming. The Pension Benefit Guarantee Corp, which is the government-created safety agency that is designed to ensure that workers get some of what they were promised, is facing its own $23 billion deficit.

Reform doesn’t mean workers can breathe easier. It means they are increasingly in charge of saving for their retirement. It means companies are expected to fulfill their promises and not dump them on taxpayers.

The days of working for the same company for decades and getting a nice pension have receded into history. We can wax nostalgic, but that won’t pay the bills. This reform is an overdue wake-up call to a nation that needs to relearn the discipline of saving and investing for the future.