Jim O'Keeffe
Question:63 Mr. J. O'Keeffe asked the Minister for Finance the basis on which the Social Insurance Fund is managed; the investment strategy applicable; and if he will make a statement on the matter. [9193/00]
Written Answers. - Social Insurance Fund.
Section 7 of the Social Welfare (Consolidation ) Act, 1993, provides that the Minister for Social, Community and Family Affairs shall manage and control the current account of the social insurance fund and that the Minister for Finance shall manage and control the investment account of the fund. The current account is used to meet the on-going expenditure requirements of the fund and any sums standing to the credit of the account are transferred to the investment account. Whenever the resources in the current account are insufficient to meet its liabilities, funds are transferred from the investment account to meet these liabilities.
For many years, the social insurance fund was in deficit and required a subvention from the Exchequer to meet its liabilities. However, in recent years, a surplus has developed which is expected to continue for some time.
The investment account of the social insurance fund is held in the Central Bank and attracts the appropriate overnight interest rate. In order to improve the rate of return for the fund, it was decided, last year, to invest part of the surplus in an Exchequer Note with the National Treasury Management Agency. Currently, some £287 million is invested in this manner, which is considered to strike the appropriate balance between security and return considerations. The remainder of the surplus, the value of which fluctuates on a daily basis depending on cash flow requirements, remains on overnight deposit in the Central Bank. As cash flow requirements permit, it is expected that further tranches of this surplus will also be put into an Exchequer Note to attract a higher interest rate.
Deputies may wish to know that, under the NTMA (Amendment) Bill currently being drafted, it is proposed to give NTMA a formal investment management role which will enable them to manage Government funds where the relevant Minister requires such a service.