No conflict of interest over Elan investment
The former boss of the Elan Corporation, who quit that post after a major controversy over the firmâs share price collapse, said he had been called upon to do a job on national pensions and felt he had acquitted himself well.
Mr Geaney, who faced calls for his resignation from the national fund, was speaking as the NPRF launched its annual report, which showed it had lost almost 4% in value this year - not counting more recent losses on investment markets.
Money from the fund had been invested in Elan shares, which have lost 90% of their value this year. But Mr Geaney said it was a rather immaterial portion of a passive eurozone-centred investment.
A spokesman for the finance minister last night brushed aside suggestions of any conflict of interest in the decision to invest pension fund money in Elan. He said Mr Geaney had no role in such operational decisions, which were taken by individual fund managers.
On the pension fund losses, Michael Sommer, the chief executive of the National Treasury Management Agency (NTMA), which manages the fund, said the exercise was marathon rather than a sprint. He insisted that the 8.3bn fund had over 25 years ahead of it.
He added that management had the right to fire any of the fund managers hired to oversee investments at any time, without giving a reason. Contracts to manage the investments were performance-related and it was expected one or two managers would be replaced over the lifetime of the fund.
The fund was set up in 2001 to meet the increase in future pension liabilities as an ageing population will become increasingly dependent on a smaller number of workers. But the strategy will only cover about 30% of the expected liabilities when the fund is cashed in 2025.
The results show that the fund grew by 3.27% up to the end of 2001 but fell by almost 4% in the following six months to the end of June.
NPRF officials said this was a lower decline rate than generally in the
eurozone, but it is also clear that much heavier losses occurred in July when markets were rocked by repeated waves of turmoil. Since January of this year, the NPRF has invested a total 6bn of the fund, retaining 2.3bn in cash due to the equity market turmoil. Eighty percent went into equities and 20% into bonds, with 15 fund managers have been allocated the money.
