Shane Ross (Independent)

After the NTMA was set up, its chief executive, Mr. Michael Somers, and the Minister for Finance used to hold annual press conferences. The Minister used to sit and glory in the performance of the agency and he attracted a great deal of press publicity because there was nothing else to cover on 31 December. Every year he and the chief executive stated how wonderfully the agency had performed in reducing the national debt. It did a wonderful job because it set its own benchmark — it was unique in this regard. It always congratulated itself on reducing the national debt but never had any standard to set it against. The media, politicians and public believed it when it said it had done very well. Even when the national debt increased, it said it had surpassed its target, which was a very liberal benchmark set by itself every year.

When I see press releases such as that issued some weeks ago on the performance of the National Pensions Reserve Fund and when I read the Government motion today, I believe history is repeating itself. The National Pensions Reserve Fund says it has achieved a return of 5.4% in the first quarter and that this is very good. It is not very good at all — the truth is that it is abysmal. A return of 5.4% is nice in that if one multiplies it by four, one gets a return of between 21% and 22% in the year, but if one notes where the fund is invested, examines the performance of competitors and measures it against any other standard, one will conclude that its performance is dreadful. The fund underperforms in comparison with those of private sector fund managers — the Fine Gael amendment covers this fairly well. We find that the National Pensions Reserve Fund has been inexplicably bad in the past year and a quarter. In the three months referred to, it is very difficult to understand how it only increased by 5.4%. The majority of its investments are in the stock market. Stocks in the Pacific Basin increased by 5.7%; stocks in Japan increased by 6.8%; stocks in the rest of Europe increased by 8.5%; stocks in the eurozone increased by10.4%; stocks in North America increased by 4.5% — so the fund beat them by almost 1%; stocks in the UK increased by 7.6%; and stocks in Ireland increased by 10.2%. The fund is second from the bottom when measured against those geographic sections.

I apologise to the House for not having had time to investigate this. I do not understand how it has done so badly. If it is invested in an average of all those markets, its performance would be at least 2% or 3% better. While it has issued a report stating it has increased by 5.4%, it is measuring itself against absolute zero; it does not have a benchmark. When measured against a world index, it has done badly. When measured against bonds, it has probably done well. When measured against property, it has obviously done pretty disastrously. While I cannot remember, I presume that at the end of last year it congratulated itself on a magnificent performance in increasing by 19.6%.

When its performance is measured against that of other fund managers, including private pension fund managers, who made 21.6%, it was beaten by 2%. I wonder what these guys are up to and how they manage to do quite so badly. A blind donkey would have made money in the equity markets in the past two years. A monkey throwing darts at the equity market would have made huge amounts of money. However, this fund seems to have done very badly. As the Minister will know, in bad years it did badly and lost money. However, the problem is with underperformance. Underperforming against fund managers is quite serious as the National Pensions Reserve Fund is managed by fund managers who compete with the fund managers I quoted. I do not understand all the patting on the back. While the headline figure of 5.4% looks pretty good, it is not very good when compared with anybody else or any other markets in the world. It is good against cash and bonds. However, it is not very good against anything else against which it should measure itself.

There is a danger in politicians of all sides using this fund of €16.6 billion for other purposes and the Government is to be congratulated on not having done so. It would be easy to make a political decision to invest this fund in infrastructure and it certainly would be open to immense temptation and abuse. We could build, roads, hospitals, etc., which would not give a return for pensioners. Financial discipline requires that this money remains and is retained purely for pension purposes, otherwise it will be abused willy-nilly by politicians of all parties.