Pensions fund nets €2.2bn profit

THE National Pension Reserve Fund (NPRF) made a €2.2 billion profit on its investments in 2005.

The fund, set up to finance the payment of public sector pensions, increased in value by €3.6 billion to €15.3 billion this year. Excluding the Government’s €1.3 billion contributed to the NPRF, it made a 19.2% return on its investment in world stock markets, property, bonds and other assets.

The National Treasury Management Agency (NTMA), which oversees the Fund’s investments, said the rise in share prices in 2005 drove the fund skywards.

“The fund’s strong performance was driven by its heavy concentration in equities and sustained growth in world equity markets, particularly in Europe and Asia, as corporate earnings grew strongly and inflationary concerns remained in check,” the NTMA said last night.

The impressive growth was also aided by the weakness of the euro against the US dollar, which improved returns on the fund’s non-euro assets.

The latest figures from the NPRF show it has invested €12 billion in 1,800 companies.

The remaining €3.3 billion in the fund is held in a variety of other assets, including property, commodities, cash, bonds and with private equity funds.

There are plans to diversify the funds holdings, committing €2 billion, or 8% of the total, to property markets worldwide by 2009.

A further €2 billion will be invested with private equity funds.

Separately, figures from the NTMA will deliver a New Year’s boost for finance minister Brian Cowen. The agency’s annual results for 2005 show that the State coffers will record a surplus this year instead of the Department’s forecasted deficit.

In 2004, Minister Cowen forecast a budget deficit of €3 billion, but NTMA chief executive Michael Somers said that based on its latest receipts, a surplus of €435 million was possible.

“We couldn’t see how €3 billion was going to be borrowed because revenue streams have been very strong and expenditure didn’t race ahead,” Dr Somers said.

He added that the Department of Finance are standing by their new deficit target of €660 million for 2005. The final outturn for the year will be disclosed by the Department next Wednesday.

The NTMA report also shows that the national debt declined once again this year. The national debt as a percentage of the overall economy dropped from 30.5% to 28% and remains amongst the lowest in Europe.

The State Claims Agency, another part of the NTMA that deals with legal actions against Government bodies, said it is currently handling about 3,300 complaints.

Almost three-quarters of these complaints are against members of the Garda, Defence Forces and Prison Service.

The National Development Finance Agency, meanwhile, which advises public bodies on raising money for infrastructure projects, has reported another successful year during which it was involved in finding finance for 22 projects with a value of €2.3 billion.

The agency is working on a number of major deals, including financial advice on the building of the National Conference Centre and the Criminal Courts Complex.