Former NTMA chief welcomes transfer of State pension pot to new fund
‘It was money for the rainy day, but we’re now in the middle of a storm,’ says Somers
Michael Somers: “There’s no point, when you’re starving, saving for an event that’s going to occur decades into the future.” Photograph: Eric Luke
The former head of the National Treasury Management Agency, Michael Somers, has welcomed the Government’s decision to transfer the remaining €6.4 billion from the National Pension Reserve Fund (NPRF) to a new strategic investment fund designed to help kick-start the economy.
As NTMA chief executive Mr Somers was responsible for setting up the NPRF in 2001 following a decision by the then minister for finance Charlie McCreevy. It was established with the proceeds from Eircom’s privatisation and was to be augmented each year with 1 per cent of GNP with a view to part-financing the country’s social welfare and public sector pension bills from 2025 onwards.
Mr Somers told The Irish Times yesterday: “At a time of plenty it was a good idea to set up a pension fund to provide for future liabilities. It was money for the rainy day, but we’re now in the middle of a storm. There’s no point, when you’re starving, saving for an event that’s going to occur decades into the future.”
On Thursday the Government announced the establishment of the Irish Strategic Investment Fund, which will use the NPRF’s remaining money to fund various projects aimed at stimulating economic growth.
Funds from the NPRF have been used to bail out Irish-owned banks since 2008, including €17.5 billion as part of the EU-IMF bailout programme agreed three years ago.
“We’ll probably get an awful lot better value from investing what’s left of the fund in whatever projects they [the Government] intend to use it for than we got out of having to shovel it into the banks,” said Mr Somers, who is deputy chairman of AIB.