Mary Upton (Dublin South Central, Labour)
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Question 38: To ask the Minister for Finance if he envisages a role for the investment on a commercial basis, of funds in the National Pensions Reserve Fund in infrastructure projects here; if this will require amending legislation; and if he will make a statement on the matter. [34049/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The National Pensions Reserve Fund (NPRF) was established in 2001 under the National Pensions Reserve Fund Act 2000. The purpose in establishing the NPRF was to meet 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.

The Act provided for the establishment of the National Pensions Reserve Fund Commission. The Commission is solely responsible for the control, management and investment of the assets of the Fund (other than assets which the Minister for Finance has directed the Commission to invest in a listed credit institution under the provisions of the Investment of the National Pensions Reserve Fund and Miscellaneous Provisions Act 2009) and for determining the investment strategy for the Fund in accordance with Fund investment policy. The Commission is required to invest the assets of the Fund so as to secure the optimal total financial return, having regard to the purpose of the Fund and the eventual requirements on the Fund to make payments to the Exchequer, provided the level of risk to the moneys held or invested is acceptable to the Commission. It is open to the Commission to invest in infrastructure projects by way of participation in a public-private partnership or by investment in infrastructure funds. The Commission would of course have to satisfy itself that the investment was in accordance with its investment mandate.

As regards NPRF investment in Irish infrastructure, I understand that the NPRF Commission completed a scheduled review of the Fund's Strategic Asset Allocation earlier this year in which the target infrastructure allocation, which includes Irish infrastructure, was increased from 2% to 5%. Furthermore, I note that, in a letter to the Committee of Public Accounts in March of this year, the National Treasury Management Agency stated that infrastructure, as a long-term investment, is a natural asset class for the NPRF and that the NPRF is keen to access PPP investments where the risk/return characteristics satisfy its statutory commercial investment mandate. Moreover, I understand that recent changes to the tendering process for PPPs will facilitate NPRF involvement in PPPs and that a number of opportunities are currently being explored.

In terms of investment in Ireland generally, the letter to the Public Accounts Committee, referred to above, also stated that the NPRF is committed to supporting domestic investment where the investment terms satisfy its risk and return requirements. This commitment includes a particular focus on the venture capital sector and the NPRF has to date made a total commitment of €68 million to four Irish venture capital funds. In addition, the NPRF has been working closely with the Government and Enterprise Ireland on Innovation Fund Ireland.