Joan Burton (Dublin West, Labour)
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Question 123: To ask the Tánaiste and Minister for Finance the value of the National Pensions Reserve Fund to date and at the end of each year since its inception; the impact global financial uncertainty is expected to have on the holdings of the NPRF in the short term; and if he will make a statement on the matter. [12830/08]

Joan Burton (Dublin West, Labour)
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Question 134: To ask the Tánaiste and Minister for Finance if he will propose an increase in State contributions into the National Pensions Reserve Fund in view of the likely increase in liabilities arising from improvements in life expectancy; and if he will make a statement on the matter. [12935/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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I propose to take Questions Nos. 123 and 134 together.

The National Pensions Reserve Fund was established on 2 April 2001 with the objective of meeting as much as possible of the cost to the Exchequer of social welfare pensions and public service pensions to be paid from the year 2025 until at least 2055.

For this purpose, the National Pensions Reserve Fund Act 2000 provides that 1% of GNP is to be paid from the Exchequer into the Fund each year. I do not propose to increase the Exchequer contribution to the Fund at this time.

The estimated market value of the fund on 26 December 2007 was €21.3 billion. The Commission publishes fund value and performance figures on a quarterly basis. I understand that an updated 2007 outturn and outturn figures to the end of March 2008 will be published shortly. The value of the National Pensions Reserve Fund at year-end since inception was:

The full accounts of the Fund are published in the annual reports of the National Pensions Reserve Fund Commission. The reports are available on the Commission's website www.nprf.ie.

Under the National Pensions Reserve Fund Act 2000, the National Pensions Reserve Fund Commission controls and manages the National Pensions Reserve Fund. The Commission has discretionary authority to determine the Fund's investment strategy in accordance with the Fund's statutory investment policy of securing the optimal total financial return provided the level of risk to the moneys held or invested is acceptable to the Commission. This framework 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 real 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.

I am aware and I accept that the appropriate investment strategy for a long-term investment fund can involve occasional short-term volatility. In its 2006 Annual Report, the Commission states that its asset allocation strategy is founded on the premise that real assets, such as equities and property, whose performance is linked to the rate of economic growth, will continue, over the long term, to outperform financial assets such as bonds. It goes on to say that, while equities are inherently more volatile than bonds, with sharp performance swings over short time periods, the Fund's long-term investment horizon enables it to accept this volatility in a trade-off for the higher expected return.