Joan Burton (Dublin West, Labour)
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Question 151: To ask the Minister for Finance the value of the National Pension Reserve Fund; the estimate of its expected value at the end of 2008, 2009 and 2025; the rate of return to the fund for the years 2006, 2007 and to date in 2008; and if he will make a statement on the matter. [43359/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The National Pensions Reserve Fund Commission publishes a report on the performance of the National Pensions Reserve Fund at the end of each quarter. The report for the third quarter of this year shows that the market value of the Fund at 30 September was €18.7 billion.

This represented a return of -17.3% for the first nine months of 2008, reducing the Fund's annualised return since inception to 2.8%. As the Deputy will appreciate, investment returns have been extremely volatile in recent times. For example, the Fund's return was 12.4% in 2006 and 3.3% in 2007, and the Fund's annualised return from its inception in April 2001 to end-2007 was 6.0%.

In relation to estimates for the end of this year and for 2009, the National Pensions Reserve Fund Commission does not make near-term return projections given the Fund's long-term investment horizon, the fact it is invested mainly in real assets and the volatility of the performance of such assets over short time periods.

I do not propose to speculate on the value of the Fund in 2025. In its 2007 Annual Report, the Commission states that, in seeking to meet the Fund's objective, it has adopted an investment strategy primarily focused on building up a diversified portfolio of equities 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. However, one of the critical factors underlying the Commission's investment strategy is the Fund's long-term investment horizon. With no drawdowns before 2025, it can afford to accept periods of volatility as a trade-off for achieving a long-term return that will make a meaningful contribution to Ireland's future pension costs and the sustainability of the pension system.