Tommy Broughan (Dublin North East, Labour)
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Question 39: To ask the Minister for Finance the estimated value of the National Pensions Reserve Fund investments as at close of business on 31 May and 21 June 2006; the comparative figures for 2005; and if he will make a statement on the matter. [24967/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The National Pensions Reserve Fund Commission, which controls and is responsible for the investment of the National Pensions Reserve Fund, publishes Fund values on a quarterly basis. The latest published figure is for 31 March 2006 when the Fund's value was €16,612m. The equivalent figure for 31 March 2005 was €12,309m. I understand that the Commission will publish figures for 30 June 2006 in July.

The establishment of the National Pensions Reserve Fund has placed Ireland at the forefront of countries preparing for the issues caused by population ageing. It is widely seen as an example of international best practice in this area, and France and New Zealand have since established very similar funds.

The Fund is managed by an expert Commission which is independent of Government in the exercise of its functions. Indeed the Commission is in a very similar position to the trustees of private pension funds and it controls and manages the Fund with discretionary authority to determine and implement its investment strategy. This has given the Commission the freedom to develop, outside of the political process, a long-term investment strategy primarily based on a diversified portfolio of assets. Indeed a long-term State fund with no need for liquidity and no requirement to match liabilities on a yearly basis has some clear advantages in seeking to maximise long-term investment returns.

In its Annual Review 2005, the Commission points out that equity markets are volatile and that returns of 2005's magnitude, when the Fund earned a return of 19.6% or €2.4 billion, should not be regarded as the norm. However, as a long-term investor, the Commission is prepared to accept this volatility. It goes on to state that the biggest risk it could run would be to take an over-cautious investment approach and thus reduce the Fund's potential contribution to Ireland's increasing pension costs. I believe this is a crucial point. I am aware and I accept that the appropriate investment strategy for a long-term fund with no drawdowns for twenty years can lead to short-term volatility. There were those who did not accept this point when the Fund experienced negative returns in 2002 and criticised both the Government for establishing the Fund and the Commission for its investment strategy. In view of the critical role of the Fund in meeting the long-term costs of population ageing in Ireland, I would hope that the rational, long-term perspective underlying the establishment of the Fund would be accepted by all.