The National Pensions Reserve Fund (NPRF) has benefited further from the recovery in global investment markets and this morning reported a return of 2.7 per cent for the first quarter.
The returns brought the fund's total value to €10.1 billion, according to its annual report, which was released this morning.
The NPRF, which earned €268 million during the first quarter, was established in April 2001 to help meet the cost of social welfare and public service pensions from 2025.
The fund's Chairman, Mr Donal Geaney, said today that the quarterly increase was in addition to the 12.8 per cent return on investments in 2003. "The Fund had a good year in 2003 and so far in 2004," he said.
Three-quarters of people now working are expected to benefit from the Fund in their retirement, mostly through social welfare pensions. "Every citizen of Ireland has a stake and interest in its success over the long-term," Mr Geaney said.
Currently there are more than five people of working age to every pensioner in Ireland. By 2050, however, that ratio will have fallen to less than 2:1.
During the year, the value of the Fund increased €2.1 billion, of which over €1 billion was earned from investments.
According to Mr Geaney, equities - which achieved an investment return of 18.1 per cent last year - were the "real drivers of growth" in the Fund.
"The pace of investment in equities accelerated as markets recovered from March 2003 and currently 76 per cent of the Fund is invested in world stock markets. Ultimately this will reach 80 per cent in keeping with the NPRF Commission's strategy," said Mr Geaney.
Mr Geaney accepted that financial markets still face "considerable geopolitical and economic uncertainty" but expressed his confidence the Fund would be able to withstand short-term market losses.
"The experiences of 2002 and 2003, and the wide disparity in returns to the equity markets in these two years demonstrate the volatility that can occur over short timescales," he said.
"However, the Fund can afford to bear this in anticipation of excess returns from equity investment over the longer-term. This consideration is central to the Commission's investment strategy," he added.
