One way to finance public infrastructural projects in future is for pension funds to be allowed invest in them, the Irish Association of Investment Managers (IAIM) has said.

The association said pension funds "because of their long term liability structure are ideally suited to fund private/public partnerships".

IAIM chairman, Mr Gavin Caldwell, said in a speech to the association's annual dinner in Dublin last night that "suitable projects that spring to mind include LUAS, major road improvements to national primary routes and additional tunnels and bridges in our cities", he said.

He added that if pension funds were able to invest in such projects it would mean they were more efficient and profitable.

"Indeed, National Toll Roads plc is an excellent, albeit very small, example of how public and private participants have worked together in Ireland to the benefit of the overall economy," he said.

He added that the debate about funding private/public partnerships is topical as EU funding in the future will be reduced.

"We know that investing in such projects would be risky, but pension fund managers are meant to be able to manage risk," he said.

Mr Caldwell also called on the Government to use its current favourable budgetary position to establish public sector pension funds, similar to those present in semi-state companies.

He said the payment of public sector pensions from current expenditure means that in salary terms the Government will face a public sector pensions bill of £1.4 billion by the year 2025.

He said the contributions made by public servants are "not invested in real assets" so employees are not getting the value they could be from their pension.