Sir, - I agree with Paul Kenny (Opinion, July 26th) that Mr McCreevy is to be congratulated on his timely and sensible decision to set aside 1 per cent of GNP annually for pensions. This type of forward planning is essential to preserving the right to a pension in old age. There are, however, some additional points to be made in relation to this; people need to be aware that such a reserve does not provide any guarantees in terms of the future value of the State pension. The National Pensions Policy Initiative (NPPI) Report Securing Retirement Income has identified a target rate of 34 per cent of average industrial earnings for the State pension, one that may or may not be met in the longer term, with many other variables to be considered. In other words, NPPI makes it clear that while efforts will be made to reach and maintain this target, no assurances will be given by the Department of Finance that pensions will maintain their real value, or that full automatic indexation can be given. The importance of this aspect of planning our future income maintenance should not be underestimated; the extreme importance of protecting the relative value of the State pension is obvious from the changed nature of pension provision in Britain. Through social insurance as well as our "pay as you go" system, many people feel they have a right to a State pension on retirement. The current Government has displayed serious commitment to improving the State pension; it is, however, very unlikely that this will go on indefinitely. It is in this context that I urge further discussion and debate on the subject as current studies indicate that almost half the workforce is without any additional pension coverage. There is evidence to suggest that one of the key reasons for this is that people don't understand how pensions work and also that they feel that they cannot afford them. The reality is that this phase of the lifecycle is inevitable for most, and far more likely than any of the other contingencies covered by social welfare to occur. Given these facts it is essential, if the current difficulties being faced in other countries are to be avoided, that Government and others engage with the public to address the challenges posed by our changing demographics, labour force and social trends. This can and needs to be tackled in a way that is sustainable and inclusive in order to meet the very diverse needs both within and outside the formal labour market. I look forward to the forthcoming legislation and hope that it will receive the scrutiny warranted by such an important issue. - Yours, etc., Mairead Considine, Westcourt Heights, Ballincollig, Co Cork.