Appearing before yesterday’s sitting of the Joint Oireachtas Committee on Finance and the Public Service, representatives of the Irish Brokers Association (IBA) said that Government needs to relax legal restrictions connected with Irish-based investment opportunities in order to strengthen the economy.
“We’re calling for a removal of all legal and revenue restrictions on investment by pension funds in these Irish investment options,” said Aidan McLoughlin, head of the IBA’s pension committee.
Currently, there are restrictions for Irish pension funds to invest in Government bonds/debt, something for which there is demand amongst fund managers, and a virtual cap on the amount of money that can be invested in Irish-quoted stocks.
Just over 5% of Irish pension fund investment is based in Ireland, mainly due to the need to be seen to be diversifying their spend internationally.
Greater potential for pension funds to invest in Irish Government bonds could, according to the association, have helped lower the cost of Government debt.
Mr McLoughlin said: “The fundamental issue, from an Irish perspective, is that significant legal handicaps exist. Remove these and significant funds will flow into the Irish economy. However, the net effect is that the local economy is denied access to vast resources which could boost our recovery.”
“With €72bn in these funds and only 5% invested in Ireland, simply investing an additional 10% of pension funds into Irish businesses would put €7.2bn into the Irish economy.”
The IBA also used yesterday’s meeting to call for a national infrastructure bond, where pension funds could invest in major infrastructural projects for a return of around 5%, and to reiterate its opposition to the proposed cut in pension tax relief to 33% which, it said, would only end up costing — rather than saving — the state money.