Vol. 567 No. 1
188 Mr. Allen asked the Minister for Finance the percentage of GDP transferred to the national pensions reserve fund in 2000, 2001 and 2002; the amount of the fund that was invested in shares by the National Treasury Management Agency in each of those years; and the amount the shares are now worth. [13571/03]
Section 18(2) of the National Pensions Reserve Fund Act 2000 provides that each year there shall be paid into the national pensions reserve fund, in equal quarterly instalments, a sum equivalent to 1% of GNP. The fund is managed by commissioners who are independent of Government. They con trol 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 Act and (b) the payment requirements of the fund as provided for under section 20, provided the level of risk to the moneys held or invested is acceptable to the commission. In following this mandate, the commission has decided on an investment portfolio of 80% equities and 20% bonds. The commission commenced entry into the markets in 2002. The assets of the fund were held in cash up to 31 December 2001.
The national pensions reserve fund was established on 2 April 2001 with €6,515 million being allocated to the fund. This sum was comprised of the net proceeds of the sale of the former Telecom Éireann and 1% of GNP in 1999 and 2000 as well as interest earned on same. A total of €972 million, representing the 1% of GNP contribution, was paid into the fund in 2001.
In 2002, the 1% of GNP contribution paid into the fund amounted to €1,034.5 million. By end-December 2002 a total of €8,163 million had been paid into the national pensions reserve fund since its inception in April 2001 by way of capital contributions from the Exchequer. A further capital contribution of €276 million was made in March 2003 bringing the total Exchequer contribution to €8,439 million.
The provisional market value of the fund at end 2002, the latest date for which figures have been published by the Commission, was €7,426 million, that is, there has been a decline of €737 million between the capital contributions to end 2002 and the year-end value of the fund. This represents a return of -13.3% since the fund's inception, as opposed to a return for the fund's strategic benchmark of -24.4% and a return for the average Irish managed pension fund of -19.3%.
