IRELAND - Up to a quarter of the country's €24bn ($34.2bn) National Pension Reserve Fund should be used to create jobs and invest in infrastructure, the Irish Congress of Trade Unions said.
In its 2011 pre-budget report released yesterday, the Congress said €2bn per year for the next three years could be taken from the reserve fund. The assets could be used to developed projects to spur job creation, like developing water and waste management systems, retrofitting energy inefficient buildings or shoring up the country's poor infrastructure.
"Ireland has a serious infrastructural deficit, mass unemployment and the wider economy needs a greater boost than this reduced package will deliver. Our suggestion of taking €2bn from the Pension Reserve Fund per year for each year of the next three years and investing it in the real economy is actually modest, the Congress said in a report.
The reserve fund has recently been used to shore up the country's banks, a move the congress called a "raid" on the reserves.
The government has already detailed plans to use up to €10.4bn recapitalise the Bank of Ireland and Allied Irish Bank, while €6.8bn of the existing portfolio is already in a ‘directed portfolio' comprised of preference shares and ordinary shares in the banks.
The Congress is not alone in thinking the NPRF could be used to boost the economy. Analysts at Glas Securities last week said the NPRF should be used for a US-style stimulus package. (Global Pensions, October 28, 2010)
The Congress also said it supported the idea of creating longer-dated sovereign bonds for pension schemes to invest in, as called for by pension representatives.
The Irish Association of Pension Funds and the Society of Actuaries in Ireland have proposed the creation of sovereign annuities which would be priced off of Irish government bonds.
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