Sunday 22 October 2017

State pension fund sells off investments to help cover bailout costs

Charlie Weston

Charlie Weston

THE National Pensions Reserve Fund (NPRF) was forced to sell some of its investments in the past few months to help cover the costs of the €85bn bailout, it emerged yesterday.

The pension fund reported it held only €5.3bn in its so-called discretionary portfolio at the end of April. This was down from €9.8bn in assets a month earlier, as it liquidated investments to help cover the cost of bailing out the banks.

Up to €10bn is to be put up by the pension fund as part of the bailout deal agreed with the European Union and IMF last November.

The NPRF also said the value of its so-called directed portfolio, which includes €7.9bn the Government has provided in aid to AIB and Bank of Ireland in return for shares in the lenders, was €13.4bn at the end of March.

There was €5.5bn in cash, representing liquidated investments to help the State meet its contribution to the EU/IMF bailout. The total fund size at March 31 was €23.2bn.

Crisis

A return of 0.3pc was earned by the discretionary portfolio in the first three months of the year, but the total fund had a return of minus 5.3pc over the quarter. On an annualised basis, the total fund return was 1.3pc.

The pension fund was set up almost a decade ago to help fund part of the country's public sector pension liabilities from 2025.

However, the crisis with the banks means the fund is now being used to cover some of the country's sovereign and banking debts.

Until the start of the crisis, it was financed by an annual payment provided by the Government that was equivalent to 1pc of the gross national product.

The total cost to the Government of rescuing its banks may increase to over €70bn, the Central Bank stress test results in March showed.

Bailout update

The fund is managed by the National Treasury Management Agency.

Irish Independent

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