No infrastructure proposals to use pension fund
Also yesterday, it was confirmed that the managers of the pensions nest-egg are still down €300 million on the cash the Government has put into it so far.
Despite the lack of funds available for building roads, railways and airports, the National Pension Reserve Fund (NPRF) is still awaiting any requests for investment from its highly publicised kitty.
Yesterday NPRF chairman Donal Geaney said the fund decided in March to invest €200 million of its €8.4 billion pot in public private partnership projects.
Under European Union budgetary rules, only certain projects will be suitable and there must be an actual return on the investment. Therefore, toll roads and public hospitals would be appropriate, but standard roads and public hospitals would not under Maastricht Treaty regulations.
National Treasury Management Agency (NTMA) chairman Dr Michael Somers agreed the National Roads Authority could adapt some of their plans to avail of the funding, but had yet to make proposals.
The NPRF is a unit of the State’s national debt managers, the National Treasury Management Agency.
Dr Somers said the slow roll-out of infrastructure was threatening the country’s future growth but he warned of the consequences of breaking the spending limits: “The European Commission can in theory fine countries that don’t get their act together and make life difficult. The smaller you are the more you can be leant upon.”
Another arm of the NTMA, the National Development Finance Agency (NDFA) actually clears any project by the Government costing more than 20 million. At the moment, 60 projects are being examined, so the NTMA are well aware of the kinds of projects coming down the line.
At the end of last year, the pension reserve fund was down more than 700m on its investments, due to the global economic downturn, but recouped 400m worth of its losses in the past six months.
At his first appearance before the Public Accounts Committee, Mr Geaney said there was €8.4 billion put into the fund and, given the deterioration of international markets, it wasn’t a bad performance.
The Government set aside €6.5 billion from the sale of eircom to start the fund and is committed to giving 1% of GNP every year and, with the young population, the country had the ability to address the pensions, Mr Geaney said.
At the moment, there are five and a half workers paying for each pension, but by 2056 there will be just two people at work for every pension. The fund will start paying out in 2025 when there will be just three workers paying for each pension.
“Every citizen has a stake in the fund and an interest in it’s success,” he said.
