Éamon Ó Cuív (Galway West, Fianna Fail)
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296. To ask the Minister for Finance if he will clarify a number of issues in respect of the National Pension Reserve Fund (details supplied); if he will outline the background to the Fund; when it commenced; the percentage basis of the annual contribution; the original long-term purpose of the Fund; his plans to handle the pensions time-bomb; the highest level of funding in the Fund; when that level was achieved; and if he will make a statement on the matter. [28833/15]

Michael Noonan (Limerick City, Fine Gael)
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The National Pensions Reserve Fund (NPRF) was formally established on 2 April 2001 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.Some €6.515 billion that had been set aside in the Temporary Holding Fund for Superannuation Liabilities in anticipation of the Fund being established was then transferred to the NPRF.The NPRF was never expected to meet the full cost of providing social welfare and public service pensions. The NPRF was a supplementary investment fund intended to support the Exchequer when budgetary pressures increased as a result of mounting pension costs.

Section 18 of the National Pensions Reserve Fund Act 2000 required the payment of a contribution equivalent to 1% of GNP from the Exchequer to the National Pensions Reserve Fund each year. In the period from 2001 to 2009 cumulative contributions to the NPRF from the Exchequer in respect of 1% of GNP amounted to €11.943 billion. Under 2009 legislation, an additional €1.416 billion was paid into the Fund in 2009 to help recapitalise AIB and BoI. In addition, €993 million was received from university and certain non-commercial semi-state pension schemes in 2009 and a further €1,079 million in 2010 under legislation which provided that the pension liabilities of those schemes will be met from the Exchequer. These additional contributions were offset against future Exchequer contributions to the Fund, with the result that no contribution was required in 2011 and a partial contribution would have been required in 2012. However an amendment to the NPRF Act, which was inserted by the Credit Institutions (Stabilisation) Act 2010, empowered the Minister for Finance to suspend the payment of the annual contribution, in 2012 and 2013. Dáil Éireann approved the suspension of Exchequer contributions in 2012 and 2013 on 7 December 2012.

Following the commencement of the relevant section of the NTMA (Amendment) Act 2014 on 22 December 2014 the assets of the NPRF became the assets of the Ireland Strategic Investment Fund (ISIF). At the time of the transition to the ISIF (end 2014) the total value of the NPRF including the Directed portfolio was €22.2 billion.Regardless of opinions on whether or not a restoration of the NPRF is valid it must be noted that under the provisions of the NPRF Act 2000 1% of GNP was payable from the Exchequer to the NPRF each year. This would have meant a payment in the order of €1.6 billion to the NPRF for 2014 requiring compensating fiscal adjustments elsewhere.  

While the need for the State to provide for the cost of social welfare and public service pensions has not abated, the Government decided that fostering economic activity and employment through the establishment of the ISIF was the immediate priority. This support for economic activity and employment puts the State in a better position to meet its pension's obligations in the longer-term. In relation to public sector pension costs, the steps this Government has taken in terms of introducing the Single Pensions Scheme will produce significant savings in the longer term. In addition, there is expected to be a significant reduction in public sector pensions following the pay and pension reductions since 2009 and the freeze in pay and pension rates until after the Haddington Road Agreement.

Further information in relation to the performance of the National Pensions Reserve Fund (NPRF) is available in the Fund's published Annual Reports which are available online on the dedicated NPRF website;NPRF.ie