Brian Lenihan Jnr (Dublin West, Fianna Fail)

Not this year, but in previous years we were in that position. This gives the lie to the constantly repeated accusation that the Government wasted all the money during the era of the Celtic tiger. In fact, it saved money, which is highly unusual in international terms. When there is no surplus available for investment in the NPRF, the State borrows the money to pre-fund the investment. That is an issue I have no doubt we will be discussing next week.

I acknowledge that the return to the fund in 2008, as with pension funds generally, was most disappointing. However, an appropriate investment strategy for a long-term fund can lead to short-term volatility, especially in difficult market conditions such as we have experienced in the last year. The commission has stated many times that in seeking to meet the fund's objective it has adopted an investment strategy primarily focused on building a diversified portfolio of equities, cash and other real assets. Such an asset allocation offers the prospect of superior long-term returns but can expose the fund to high levels of short-term volatility. One of the critical factors underlying the commission's investment strategy is the fund's long-term investment horizon. With no draw-down before 2025, it can afford to accept periods of volatility as a trade-off for achieving a long-term return that will make a real contribution to future pension costs and the sustainability of the pension system. It is unclear how the amendment would assist in that objective. Given the current emergency conditions, I do not believe it is possible to earmark the fund at this stage, but it does raise a question on which we can reflect in due course.

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