The Minister for Finance Mr McCreevy launched the National Pension Reserve Fund today by introducing the members of the independent commssion who will manage the fund on behalf of the State.
Mr McCreevy signed the act which was passed by the Oireachtas in December 2000. Under the legislation future governments will be compelled to set aside and invest 1 per cent of Irish Gross National Product in each of the next 25 years to fund future pension liabilities.
Explaining the purpose of the fund, Mr McCreevy said the age structure of the Irish population is likely to change dramatically in the future as the current working population nears retirement.
This growing number of pensioners increases the burden on the working population to fund social welfare payment through income tax. This increase, in what is called the dependency ratio, will have major budgetary effects in the future, according to the Minister.
The Government has already set aside over £5 billion from the eircom flotation and 1 per cent of GNP in 1999 and 2000 to kick-start the fund.
Mr Donal Geaney, chief executive of Elan will be chairman of the fund's board of commissioners.
The commission's other members are Mr Bob Curran, a recently retired senior officer at the Department of Finance, Ms Brid Horan, general manger of pensions at the ESB, Dr Martin Kohlaussen chairman of Commerzbank, Mr Donal Roth of Emerging Markets Partnership, a Washington based investment firm, Mr Daniel Tully chairman Emeritus of Merril Lynch and Dr Michael Somers, chief executive of the National Tresury Mangement Agency.
Mr Geaney said the commission's first task over the coming months was to determine the optimum asset allocation and strategy of the fund. He added that no investment managers or consultants have been appointed by the fund and that this process would not be completed until the end of the year.