As grand openings go, it was hardly spectacular but the Minister for Finance, Mr McCreevy, could be well pleased at the formal setting up of the national pension reserve fund this week. The fund, which already has more than £5 million to invest and which will receive 1 per cent of GNP for the foreseeable future, is designed to defuse the pensions time bomb.

Ireland is not alone in facing a squeeze on State pension funding with fewer working people to support each pensioner. In many ways it is fortunate that the pinch will be felt later here than in some of our European neighbours already struggling to meet their commitments.

Ironically, it was our relative economic poverty that has played into our hands. The baby boom arrived later in Ireland as we caught up on the economic well-being of our neighbours. We also get a breather because many Irish people who would reach retirement age in coming years were forced to emigrate years ago and will now depend instead on pension provision elsewhere.

There is still some dissent on whether the fund is the best use of national resources in meeting the State's commitments. Still, Mr McCreevy will be content that, as some berate him for not making the most of our current economic boom, he can point in his defence to his far-sighted approach on pensions, where Ireland has shown the way to our European partners.

dcoyle@irish-times.ie