Minister for Finance Michael Noonan has said there is “no question of frittering away the people’s savings” as he published legislation to transfer €6.8 billion into the State’s new investment fund from the national pension reserve.
The legislation will establish on a statutory basis the Ireland Strategic Investment Fund with the remaining assets from the National Pension Reserve Fund (NPRF), the establishment of which was championed in the boom times by former Fianna Fáil finance minister Charlie McCreevy.
“The object of it is to help to grow the economy further and to create jobs. We’re using the resources to invest in our own economy. A lot of the emphasis will be on investment for the SME sector,” Mr Noonan told reporters today.
Emphasising that investments by the fund must secure a commercial return for the State, the Minister said there was “no question of giving out money for pet causes that some department has”.
Asked how he explained taking money from the fund for public pensions for investments, Mr Noonan said the situation had changed quite drastically since the NPRF was set up.
“A lot of the pension fund reserve, the State was compelled to use it as part of the bailout programme,” he said.
“Rather than having kind of money in a piggy bank and saying draw on that if there’s a problem with pensions, the best guarantee of pension security is to have a growing economy and people working and that’s the strategy.
“But of course all decisions under statute have to be commercial decisions, so there is no question of frittering away the people’s savings. This is an investment programme to grow the economy and to make life for Irish people in the future more secure, both in terms of having jobs and security of pensions when they retire.”
Pension bill
Minister for Public Expenditure Brendan Howlin added that separate pensions legislation in force since the start of 2012 would reduce Ireland's public pension bill by some 35 per cent over 40 years.
Meanwhile, Mr Noonan has said he will appoint a new secretary general at the Department of Finance by mid-July in succession to John Moran, who resigned last week.
The Minister said he will unveil the budget on October 14th or 15th, the latter being the deadline set down in European law for the submission of the financial plan to Brussels. The “most likely” date was the 14th.
At the same time, Mr Noonan insisted the Government will not “travel blind” as it examines a contentious new initiative to intervene in the mortgage market.
While saying the mortgage insurance idea was worth exploring, he made it clear that the final decision on whether to proceed with the plan will depend on the outcome of a comprehensive economic impact analysis.
The idea is for the State to guarantee a small portion of a home loan, the aim being to boost the creditworthiness of new house buyers.
This would be targeted at first-time buyers, who might have saved enough for a 10 per cent deposit, but whose lenders demand a 20 per cent deposit.
