Terence Flanagan (Dublin North East, Independent)
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295. To ask the Minister for Finance to outline the use of the money from the National Pension Reserve Fund's sale of its Bank of Ireland holding (details supplied); and if he will make a statement on the matter. [21363/15]

Michael Noonan (Limerick City, Fine Gael)
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The €1.9 billion capital proceeds of disposals (i.e. excluding accrued interest) from the NPRF's Directed Portfolio holdings in Bank of Ireland in December 2013 were retained in case it was found necessary to use them in the light of the results of the Banking stress tests in October 2014.  In January 2014 these proceeds were invested by the NTMA in securities at my request.  A portion of these proceeds were used to provide capital and loan funds to help set up the Strategic Banking Corporation of Ireland (SBCI) in September 2014.  As the outcome of the bank stress tests were favourable it was not then necessary to use the balance of the proceeds towards re-capitalising Irish banks.  In light of this positive outcome in March of this year I directed the NTMA to sell the €1.6bn of remaining securities, the proceeds of which were subsequently transferred to the Exchequer and used to part-finance, together with cheaper market based funding, the early repayment of the most expensive portion of the State's IMF loan facility. 

Following the majority commencement of the NTMA (Amendment) Act 2014 on 22 December 2014 the assets of the National Pensions Reserve Fund (NPRF) became the assets of the Ireland Strategic Investment Fund (ISIF). The NPRF now legally only exists to manage the transfer of its assets to the ISIF. 

As you will be aware, the NPRF was set up with the intention to meet as much as possible of the cost to the Exchequer of social welfare and public service pensions from 2025 to at least 2055. While the need for the State to provide for social welfare and public service pensions obligations has not abated, fostering economic activity and employment is currently a greater priority and this will in turn put the State in a better position to meet its pensions obligations in the longer-term.

It also must be noted that there is expected to be a significant reduction in public sector pensions following the pay and pension cuts since 2009 and the freeze in pay and pension rates until after the Haddington Road Agreement.

A key result of the most recent actuarial valuation carried out by the Department of Public Expenditure and Reform to update the accrued liability in respect of Public Service occupational pensions was that the total accrued liability was estimated at €98bn as at December 2012. This compares with the previous estimate of €116bn for 2009 which was arrived at by the Comptroller and Auditor General (C&AG). Therefore, over the three years from 2009 to 2012 the liability fell by €18bn or by 16%.