The Minister for Social Affairs Séamus Brennan has said that any proposed solution to a potential pensions crisis will have to be "financially and economically sustainable" for both employers and the Exchequer.

Mr Brennan said that, while he believed there was a social responsibility to improve the pensions situation for nearly one million workers who have no pension provision, this had to be balanced against what the State and private sector could afford to pay.

He said "hard decisions" would have to be made and that if people wanted better pensions for all workers, they would have to pay for it.

He was reacting to warnings from the Department of Finance, which advised the Pensions Board that proposals for a hybrid scheme to improve occupational pensions involving contributions from individuals, companies and the State, was unworkable, as it would cost up to €3 billion a year.

The Pensions Board report also dealt with how a mandatory opt-out system of pension contributions by all workers could operate, although it did not propose such a system.

Employer representative bodies have said any move requiring extra payments from them to pay for pensions would be resisted.

"I've no problem with the view which says that, while there are social responsibilities here, given that the number of people aged 65 or over is going to double in the next 20 years, whatever we do has to be financially and economically sustainable, apart from being socially sustainable," he said.

Despite the concerns of businesses and the department, there had been "real progress" in addressing the pensions issue.

"We've come a long way on this in 18 months, from something that was hardly being discussed to getting to the top of the partnership talks, and high up the political agenda."

The Government now plans to draw up a Green Paper outlining the options to tackle the issue, which it hopes to publish within 12 months. "We should not underestimate for the public that there will be costs for the public to bear."

Any decision would need a "national consensus because its about what type of country we want to have and what we are willing to pay for. The public will have to make their mind up. You cannot have pensions for all unless you have substantial payments by all."

The Green Party is to publish later today its own policy on pensions, which will outline proposals on introducing mandatory pension schemes, and improved State support for providing pensions to those on lower incomes.