The Minister for Finance is trying to prevent pensions being a "cookie jar" into which future administrations could "dip" their hands, he told the Dail. Mr McCreevy defended his decision to insist that 1 per cent of GNP would be added to the pensions fund annually.

He was speaking in the debate on the National Pensions Fund Bill which aims to set aside funding for pensions.

Mr McCreevy said he was removing the pension fund from the government of the day. "While the Oireachtas can make a decision to change it when it is up and running, it will be a brave minister for finance who says he intends to dip into the fund to finance certain measures."

Fine Gael's finance spokesman, Mr Michael Noonan, voiced concern about the annual 1 per cent commitment and said the Minister's formula was "far too inflexible". Mr McCreevy was putting "handcuffs" on subsequent administrations which would force them to make very difficult decisions if the economy returned to budget deficits. "The choice may be to close a hospital or reduce the efficacy of the health service because we decided to put away money for the rainy day."

They were "making a decision that will tie our successors for the next 25 years by initially putting €5 billion into a fund and then requiring our successors to supplement it by annual tranches of amounts in excess of €600 million and rising as GNP rises."

Labour's finance spokesman, Mr Derek McDowell, said the €600 million was "more than we spend on education, social welfare or the health services every year and it is an enormous amount of taxpayers' money".

He said Mr McCreevy was making a statement of policy which bound the hands of ministers for finance "for at least a quarter of a century and arguably up to half a century".

He believed it was "fundamentally unfair" to set aside money to fund pensioners in 25 years if the current levels of pensions was inadequate. "How can we ask taxpayers to set aside tax moneys to cater for future generations if their own parents are living in poverty?"

However, Mr McCreevy said he had "seen the pressure on governments and I have seen what ministers for finance have had to do. I am trying to ensure the Bill will not be a cookie jar into which someone can dip his hand."