National Pensions Reserve Fund - Fund Snapshot

May 11, 2013

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Note: On June 13 the Irish Department of Finance announced plans to sell off the €6.4 billion ($8.6 billion) discretionary portfolio of the National Pensions Reserve Fund (NPRF), which comprises stocks, bonds and alternative assets, and restructure the National Treasury Management Agency (NTMA), which undertakes NPRF’s investments. The department outlined its plans in the NTMA (Amendment) Bill 2013, which has been approved by the government and is awaiting parliamentary approval and ratification later this year. The bill calls for the proceeds of the discretionary portfolio’s sale to be reinvested in a new, NTMA–managed domestic development fund called the Ireland Strategic Investment Fund (ISIF). As structured by the Department of Finance, ISIF would support Irish economic growth and job creation by taking stakes in industries such as water, energy and telecommunications. The NPRF Commission, which currently oversees investment of the discretionary portfolio, will be dissolved, and NPRF’s remaining €8.8 billion total investment in Allied Irish Banks and Bank of Ireland, known as the directed portfolio, will be incorporated into ISIF.

The Irish government established the National Pensions Reserve Fund (NPRF) in April 2001 with €6.5 billion ($8.7 billion) from the privatization of Telecom Éireann. It launched NPRF to cover social welfare and public pension costs after 2025.

The NPRF Commission controls and determines the fund's strategy, while the National Treasury Management Agency (NTMA) undertakes the investments. NPRF invests wholly through external asset managers and Ireland's National Treasury Management Agency (NTMA).

During the 2008–'09 financial crisis the government used NPRF to rescue two troubled banks, Allied Irish Banks and Bank of Ireland, investing €3.5 billion ($4.62 billion) in each in March 2009, and a total of €14 billion ($18.7 billion) in tranches throughout 2010 and 2011. After the first bailouts the NPRF Commission split the fund into two parts: a Finance Ministry–controlled directed portfolio comprising the bank bailouts, and a discretionary portfolio that the commission invests according to the original mandate.

The crisis and bailouts reduced NPRF's assets from €21.6 billion ($31.5 billion) in 2007 to €13.4 billion ($17.4 billion) in 2011, of which only €5.4 billion ($7 billion) remains in the discretionary portfolio. The government increasingly uses the discretionary portfolio for domestic development.

NPRF had total assets of €14 billion ($18 billion) as of September, 30, 2012, reflecting an annualized return of 3.3 percent since 2001.

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