The Government plan to set money aside each year to fund future pension requirements produced strong debate at a seminar in Dublin yesterday evening, with two prominent speakers strongly criticising the proposal.

There is little evidence that funding pensions will increase national savings and reduce the burden of further generations, according to Prof Gerry Hughes of the Economic and Social Research Institute. The current working generation was being asked to pay twice, he said, once for the last generation and again for the next generation. Funding pensions in order to manage budget surpluses restricted our freedom of action, he told the debate, hosted by the Society of Actuaries.

The danger of "politicisation" of investment - with politicians accused of favouring pet projects - may lead to most of the fund being invested abroad, he warned. Fund management costs could end up eroding much of the expected return and the money would be exposed to stockmarket risk. Also speaking of the problems, Mr Colm Fagan, managing director of Life Strategies, said that from a narrow perspective taxpayers would get a poor return from the fund, while from a wider perspective it betrayed a lack of imagination.

"The most damming indictment of the proposal from an investment point of view is that it betrays a lack of imagination." Ireland's economic success is attributable in large part to investment in education and our current wealth should also be used " to educate and train" on a wide scale. Supporting the fund plan, Mr Paul O'Faherty, actuary, said the State was facing a pensions bill that would double over the next 10 to 20 years and it made sense to set money aside now when things were good. Saving now for future pensions would make them more affordable, he said.

Ms Ann Fitzgerald of the Irish Association of Investment Managers, said her organisation would welcome the appointment of the National Treasury Management Agency as a "manager of manager", which would appoint investment managers to manage the money.