The Government has today been called upon to implement a new €6 billion pension scheme to help recoup the losses suffered by Irish pension funds and to bolster small and medium-sized firms.
According to the Irish Brokers Association (IBA), the capital boost given to banks under the recently-announced recapitalisation plan is "a disaster" for small firms because while it may help to keep financial institutions afloat it does little to ease the difficulties that businesses around the country are facing.
The association is proposing that a voluntary code be adopted by investment managers, pension trustees and pension holders, whereby 10 per cent of Irish pension funds, equivalent to €6 billion, is invested in private firms. This, it claims, will effectively replace the normal facilities historically provided by the banks.
The IBA said that such a scheme would remove the problems caused by the credit crunch and mobilise industry and would be able to be implemented without delay.
"The pension sector can simply utilise and dramatically extend the well established BES scheme structure to effectively direct capital towards Irish SMEs. Such a scheme, supported by Enterprise Ireland, will provide all the checks and balances necessary to ensure that funds are invested in solid thriving businesses that will provide the employment that this country needs, as well as a healthy return for the pension funds," said Ciaran Phelan, financial services director, IBA.
"We are encouraging people to ask their pension trustees to increase the weighting in Irish SMEs. This will not only help the economy it will allow Irish pension funds to recover far more quickly from the debilitating losses caused by traditional investment strategies. We have also called on the Association of Investment Managers and our members to support this initiative, and we urge that their clients instruct their pension managers to invest 10 per cent of their fund in this scheme," he added.
