Vol. 573 No. 5
58 Mr. Quinn asked the Minister for Finance if he will make a statement on the performance of the National Pensions Reserve Fund; and the extent of the losses incurred by the fund at the latest date for which figures are available. [25785/03]
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 the purpose of the fund as set out in section 18(1) of the National Pensions Reserve Fund Act 2000, and 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.
These features of the Act are similar to the trustee arrangements which exist in private pension funds. Along with the statutory prohibition on draw-downs from the fund prior to 2025, they insulate the fund from day to day pressures on Government and enable the commission to take a long-term view. This is essential if the purpose for which the fund was established, to meet as much as possible of the cost to the Exchequer of pension payments from the year 2025 until at least the year 2055, is to be achieved.
In light of the provisions of the National Pensions Reserve Fund Act 2000 that I have just set out, I do not regularly ask the commission for detailed reports on short-term investment returns. The fund's investment strategy is a matter for the commission and I have no say in it. It is my strong view that regular discussions between me and the commission on its investment strategy and the resultant short-term gains and losses, which may in any event never be realised, would seriously interfere with the long-term focus which must attach to a fund which will not start to make significant disbursements for more than 30 years.
The provisional market value of the fund at 18 July 2003, the latest date for which figures have been published by the commission, was €8.392 billion. This represented a return for the year to that point of 5.2% and a reduction in the loss of capital to the fund from €737 million at end 2002 to €323 million. This capital loss is a net figure which takes account of investment income in both the temporary holding fund and the fund itself, and also of gains in the bond portion of the fund offset by declines in the value of equities.
Question No. 59 answered with Question No. 54.
