Professor Michael McMahon:

In many ways, the establishment and governance set-up of the National Pensions Reserve Fund was correct. It is also correct that democracy requires that if a government of the day needs to change the rules, it can and should. When we consider a long-term savings vehicle that is built up over a number of years with excess corporation tax - we will have to agree a name so we all call it the same thing - one advantage, as I said to Deputy Patricia Ryan, is that the bulk of those pension costs will come much further down the road. By the time we get there, the hope is that the pension savings pot is very large.

You will not then be eating into the capital, but using the resources and earnings from it to pay these costs. That is advantageous because Ireland's fiscal credibility for addressing these long-term costs would then rest upon the establishment and existence of that pot of money. That would make it incredibly costly for anybody to just change their mind and say they would spend it on something else. That has certainly been the historical experience of these funds, particularly commodity-based ones that have been built up to a sufficiently large level. They do establish themselves as independent and those flows of income are what the Government gets to use, as it does other revenue sources.

To me, that would be the biggest advantage. It would enhance credibility. As I was saying to Deputy Patricia Ryan, it would mean that the existing challenges of the day - whether the day is 2030, 2035 or 2040 - would not be dominated by the pension question. The Government could address other challenges, such as whatever the social challenges are during that time. To me, that is the main benefit. Other uses for that money today typically come sooner and therefore do not give the time for the pot to accumulate to a sufficiently large level. If it is not at a sufficiently large level, it either does not enhance your credibility to deal with things, because it is a small pot that will not really make any headway, or it is not viewed as sufficiently large and important to make raiding it to be costly for fiscal credibility. That is the challenge, but this is very much a decision for elected officials.