IRELAND - The National Pensions Reserve Fund (NPRF) is to "channel" resources into a new strategic investment fund announced by the Irish government this week, likely resulting in a further reduction of the scheme's remaining €5bn in assets not invested in the country's banks.
Billed as a forerunner to the Strategic Investment Bank, an initiative promised by the ruling Labour party in its manifesto, it will invest in areas of "significance" to the country's economy, while targeting equal investments from commercial partners, the minister for public expenditure and reform Brendan Howlin said.
He added that, following "appropriate legislative changes regarding the NPRF's investment policy", the scheme would channel resources toward the new initiative.
According to the most recent quarterly report, the NPRF's discretionary portfolio accounts for €5.3bn of assets, while the scheme's remaining €15.5bn is controlled by the Department for Finance and invested in Allied Irish Banks and the Bank of Ireland.
Questions about the volume of re-directed assets, as well as whether they would be drawn from the discretionary or directed portfolio, went unanswered by the department at the time of publication.
The government further announced the creation of a new agency in charge of all state and semi-state companies, fulfilling a corporate governance function on the country's stakes in the Electricity Supply Board, EirGrid and others.
NewERA, headed up by the NPRF's current head of alternative assets Eileen Fitzpatrick, will work with Howlin's department on the potential privatisation of the state companies, as agreed with the IMF as part of the country's bailout package.
Howlin also announced details of a new, single scheme for Irish civil servants in an effort to save as much as 35% on pension payments by 2050.
As previously indicated, the new scheme will allow for a shift away from final salary to career-average revalued earnings (CARE).
It will also link pension increases to the consumer price index and raise the retirement age for workers.
Unveiling the Public Services Pensions (Single Scheme) and Remuneration Bill, the Labour party TD insisted the changes would allow for a "simpler and more transparent" pension system, while reducing predicted cost to the state by 2050 from €5bn to €3.2bn a year.
"The new scheme will be fairer, particularly to those on low and moderate earnings," Howlin said.
"Above all, the public service will be better able to manage the costs associated with the demographic and other changes that are coming."
Under current proposals, the new scheme will be subject to the country's pension levy and only apply to new entrants.