In a move similar to Ireland's National Pensions Reserve Fund (NPRF), the French government is creating a FFR50bn (EUR7.6bn) reserve fund - all of which will be outsourced at the end of the year.
According to the Ministry of Employment and Solidarity in Paris final approval for Le Fond de Reserves pour les Retraites from the Assemblee Nationale is expected by the end of June.
Financial organisation Caisse des Depots et Consignations (CDC) will provide fund administration.
The new fund structure includes a board of trustees - MPs, employer and employee representatives, state representatives and industry experts. A board of three directors will also be set up with the director general of CDC Daniel Lebegue as president.
Contracts are for six years and the board - or directoire - will be responsible for investment strategy. The Ministry declined to comment on the role of CDC’s investment arm, CDC IXIX Asset Management.
The Cour des Accounts - a French independent public body - will certify and guarantee the accounts.
Contributions will come from excesses in government retirement schemes including the Fonds de Solidarite Vieillesse and the Caisse Nationale d’Assurance Vieillesse des Travailleurs Salaries (CNAVTS). Other sources include property taxation, proceeds from UMTS (universal mobile telephone system) licences and privatisation revenues.
According to the Ministry, the new fund has been established to accommodate longevity and demographic issues and is expected to be worth approximately FFR1,000bn by 2020.
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