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National Pension Reserve Fund and Sale of State Assets

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Clearly the Minister for Finance's left hand does not know what his right hand is doing. 

On the one hand, he has the National Pension Reserve Fund with €17 billion invested in about 2,900 companies worldwide in addition to €7 billion invested, on his instructions, in the two main banks. Financed mainly by Exchequer borrowings, the Fund has produced a meagre 2.6% annual return since 2001. It now proposes to tilt its portfolio towards riskier investments in the hope of doubling its annual return so as outperform the cost of government debt, currently 5%.

On the other hand, the Minister is investigating the possibility of selling prime State assets to reduce the national debt. Such sales could occur at a low point in the economic cycle and would have to be "priced to go" to deliver profits to investors.

If the Minister joins his hands together, he could direct the Fund to dispose of its overseas investments and lend the proceeds to the Exchequer to generate a risk-free return for the Fund that matches the State's cost of borrowing. Alternatively, the proceeds could be used to make arms-length purchases of suitable State assets or invested in new infrastructural projects in Ireland.

Letter published in the Sunday Business Post on 8th August 2010.

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The goal of the Individual Pensions Military Fund is to figure up assets which will part-finance the Exchequer value of interpersonal good and unrestricted serving pensions from 2025 onwards, when the State's pensions note is foreseen to climb significantly with the modernized senescence of the accumulation. The government providing for the proof of the Fund was passed by the Parliament in December 2000.

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This page contains a single entry by Brian published on August 11, 2010 11:00 AM.

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