Batt O'Keeffe
Question:13 Mr. B. O'Keeffe asked the Minister for Finance his views on the amount of Irish pension fund money which is invested abroad. [22488/96]
Written Answers. - Pension Funds.
From information published by the pension fund industry, the pension fund sector had total assets in excess of £16 billion at end of 1995, with over £6 billion or nearly 40 per cent of these funds invested in overseas assets. Over the past three years, pension funds in Ireland have focused on the establishment of a venture capital fund and on identifying suitable investment opportunities in the domestic economy. The venture capital initiative launched in 1994 resulted in the pensions sector agreeing to commit some £50 million to venture capital projects over a five year period. This in turn led to further pledges amounting to £45 million from other sources, bringing the total fund to £95 million. I am informed that to date the fund has made total investments of £34 million in companies employing more than 4,400.
The venture capital initiative is a positive step in the right direction. What is also required within the pensions sector is a more critical re-appraisal of current investment policies and a concerted effort over time to bring about a greater level of investment by the sector in the economy. As a first step in this process, a study was carried out recently by consultants on the scope for increasing pension fund investment in the economy. The study, which was jointly commissioned by the Irish Association of Pension Funds, the Irish Association of Investment Managers and the Minister for Finance, identifies a range of opportunities for achieving greater pension fund investment in various sectors of the economy, including the Irish equity market, the corporate bond market, infrastructural and other projects in the public sector, and commercial State-sponsored bodies. The consultants' report is an important contribution to the advancement of practical measures to enhance pension fund investment in the State. The report was published last year.
There are no instant or quick-fix solutions to this problem. Indeed, the openness of our economy and the increasing integration of international capital markets makes it inevitable that the pensions sector will continue to hold a significant portion of their funds in overseas assets. Nevertheless, the Government considers that pension fund managers should endeavour to rebalance their portfolios over time in favour of Irish investment. The Government for its part will facilitate this process by continuing to pursue sound economic policies and by providing a favourable environment for business activity which investors can feel confident about. It will also continue to examine the viable options for increasing pension fund investment in the State by a variety of means.