Madam, - The National Pension Reserve Fund has lost about $3 billion (15 per cent of value) over the past four quarters as a consequence of the international credit crisis.
In these circumstances, it makes no sense for the Exchequer to continue borrowing about €1.6 billion a year from abroad for the fund to continue to making risky overseas investments while cutting back on domestic investment and turning to expensive Private-Public Partnerships and massive tax breaks to progress critical national projects.
This nonsense is compounded by the fact that the fund must achieve a return on its investments in excess of the cost of borrowing "to wash its face".
The National Pension Reserve Fund is one of the few funds in the world not financed by oil and commodity revenue surpluses. Has the Government forgotten the rules about never borrowing money to buy shares or investing what you cannot afford?
Surely it makes more sense for borrowings earmarked for the fund to be redirected immediately to finance much-needed major infrastructural projects now instead of being used to make overseas investments for pensions payable decades hence.
This could be done simply by legislating a "contributions holiday", say, for three years to free up about €5 billion.
This would enable critical projects to be progressed more quickly and kept in public ownership.
For example, the eight co-located hospitals, which will cost the taxpayer a fortune and further fragment our two-tier health service could be progressed in public ownership using a fraction of these liberated funds.
By 2025, the National Pension Reserve Fund could be valued at €80 billion at current prices (€150 billion at 2025 prices).
Given that every taxpayer and consumer will have contributed to the fund, what guarantees can be offered that payments out of the fund after 2025 will be equitably distributed and not skewed towards increasingly unsustainable, unfunded "gold-plated" pensions for politicians and the public sector at the expense of much more numerous, poorly pensioned citizens in the private sector?
For example, the fund has indicated that public service pension costs will reach 3.7 per cent of GDP by mid-century, while social welfare pensions for a far larger number of people will only rise to 10.1 per cent.
As contributors to the fund, we should be given absolute assurances that future governments will not treat the fund as a massive "slush fund" to support vested interests, as done with decentralisation, benchmarking etc. - Yours, etc,
BRIAN FLANAGAN,
Ardmeen Park,
Blackrock,
Co Dublin.