John Gormley
Question:126 Mr. Gormley asked the Minister for Finance the extent to which ethical investment principles inform investment decisions regarding the national pension fund. [25579/02]
Written Answers. - National Pensions Reserve Fund.
The national pensions reserve fund is managed by commissioners who are independent of Government. They control and manage the fund with discretionary authority to determine and implement an investment strategy for the fund. This investment strategy is based on a commercial investment mandate with the objective of securing the optimal return over the long-term, having regard to (a) the purpose of the fund as set out in section 18(1) of the National Pensions Reserve Fund Act, 2000, and (b) the payment requirements of the fund as provided for under section 20 of the Act, provided the level of risk to the moneys held or invested is acceptable to the commission.
In determining the investment policy of the fund during the drafting of the National Pensions Reserve Fund Act, I gave consideration as to whether this policy should be strictly commercial or whether it should be qualified by ethical, environment and other public policy criteria.
A major difficulty in deciding on an ethical investment policy is where to draw the line, given that there will inevitably be different opinions and intense debate on what constitutes ethical and socially responsible investments. In short, there is unlikely to be broad consensus on any ethical investment policy. Furthermore, the list of what might be considered unacceptable investments is likely to continually change in the light of developments in the political, social and scientific spheres.
Accordingly, the investment mandate included in the legislation is modelled on the standard commercial mandate for private pension funds – i.e. maximise returns subject to prudent risk management. However, I would point out that the National Pensions Reserve Fund Act provides for the accountability of the commission to this House with regard to its investment strategy. The commission's annual report must be laid before each house of the Oireachtas and is required to include a detailed list of the fund's assets at year end. Furthermore, the chairperson of the commission is required to appear before the Committee of Public Accounts at that committee's request.