IRELAND - Pension funds in Ireland should be offered a rebate of any pension levy paid if they choose to invest in domestic infrastructure projects, the president of one of the country's largest unions has argued.
Jack O'Connor, general president of SIPTU, had previously suggested a 5% allocation of pension assets to infrastructure as an alternative to the pensions levy - a 0.6%, four year tax on all pension assets that has been widely criticised within the industry and is leading to a reduction of benefits in payment at numerous funds.
Speaking to IPE, O'Connor proposed a modified version of his initial exemption from the levy for schemes investing in infrastructure.
"In the new year, we will be putting forward a modification of our proposition, along the lines that the actual levy could be taken from the funds and the exemption could be rebated back when the investment proceeds and the jobs are generated," he explained.
Income from the €470m a year levy is earmarked for the government's jobs initiative.
O'Connor argued that pension funds had the advantage that for them, time was not as "immediate" a concern as it was when outlining state budgets.
He also highlighted the role the Irish Pensions Board could play in incentivising local infrastructure investment.
"If there was a way our pensions regulator could be persuaded to recoginse that the funds would be getting the exemption, they could factor it in to the calculation of the assets for the valuation of their solvency," he said, referring to the recently reinstated funding standard.
He admitted that his proposal was dependant on the shape of any investment vehicle developed by the government, as well as interest from scheme trustees. Many European governments are seeking to increase infrastructure investment in a way that does not lead to higher levels of state debt - with the UK's Private Finance Initiative allowing the country's government to keep any new debt off its balance sheet.
A number of prominent Irish infrastructure projects have recently seen their government funding cut as a result of austerity measures, with proposals for Dublin's first metro line now stalling.
The minister for public expenditure and reform Brendan Howlin has previously said he is "engaging" with pension funds and other institutional investors to attract investment to the country.