By VERNON SMALL deputy political editor

Alliance leader Jim Anderton has rubbished suggestions that Labour's plans for a huge fund to partially prefund pensions have run into trouble.

But he is still seeking assurances that transfers to the fund are "real money," not paper transactions.

"Measuring on a scale of one to 10, with 10 being success and one being minimal advancement, we are on about 8 at the moment," Mr Anderton said yesterday.

He said a deal was close, and prefunding was not an issue, but the money transferred to the fund must be "real."

If the Government needed to borrow for the fund, it should be up front about it.

"I am not interested in sleight-of-hand accounting. I am interested in reality."

It is understood that the Coalition is likely to agree on a percentage of gross domestic product to be set aside each year from budget surpluses.

But the Alliance wants a tight definition of what qualifies as "cash" in the surplus.

If Labour and the Alliance agree on a scheme, they will need the backing of at least one other party to pass the fund into law.

Mr Anderton was critical of National's finance spokesman, Bill English, who has indicated that if National did not like the scheme's provisions it would use the fund to repay debt and then look at tax cuts from the freed-up cash.

Finance Minister Michael Cullen joined the attack on Mr English, saying: "A policy which is about cutting taxes to the rich in a couple of years' time to cut pensions in the future is a real loser, and please run on it [at the next election]."

Mr Anderton said he hoped the scheme agreed to by the Coalition would be robust enough for other parties, including National, to be asked to sign up.

A referendum to entrench the scheme would not stop future Governments raiding it, and the best insurance for its long-term survival was multi-party backing.

Dr Cullen said the Government's initial aim was to secure the first tier of state pensions, to be paid at a flat rate without an income or asset test. Then it would look at the taxation treatment of other superannuation savings.