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33 2000

NATIONAL PENSIONS RESERVE FUND ACT, 2000

PART III

National Pensions Reserve Fund

Establishment of National Pensions Reserve Fund.

18. —(1) There shall stand established, on the establishment day, a fund to be known as the National Pensions Reserve Fund, and in this Act referred to as the “Fund”, for the purpose of meeting as much as possible of the cost to the Exchequer of social welfare pensions and public service pensions to be paid from the year 2025 until the year 2055, or such other subsequent years as may be specified in an order under section 20 (3).

(2) Subject to subsection (3), in each year, commencing in the year 2001 and continuing until the year 2055, there shall be paid by the Minister into the Fund from the Central Fund or the growing produce thereof, in equal quarterly instalments, a sum equivalent to one per cent. of Gross National Product.

(3) The Minister may, after consultation with the Minister for Social, Community and Family Affairs, at any time, by order extend beyond the year 2055, the period for payment into the Fund referred to in subsection (2).

(4) The Minister may by order provide that, where the period for payment into the Fund has been extended under subsection (3), payment into the Fund in the period extended may, in any year, be less than one per cent. of Gross National Product.

(5) The Minister shall pay into the Fund from the Central Fund or the growing produce thereof such sums, additional to the sum referred to in subsection (2), as may be approved, from time to time, by resolution of Dáil éireann.

(6) The Fund shall be controlled and managed by the Commission acting through the Manager.

(7) Ownership of the Fund shall vest in the Minister.

(8) The Minister may by order amend or revoke an order made under this section (including an order under this subsection).

Investment policy for Fund.

19. —(1) Moneys standing to the credit of the Fund shall, from time to time, be held or invested for the benefit of the Fund by the Commission, in or outside the State, so as to secure the optimal total financial return, as to both capital and income, having regard to—

(a) the purpose of the Fund as set out in section 18 (1), and

(b) the payment requirements of the Fund as provided for under section 20 ,

provided the level of risk to the moneys held or invested is acceptable to the Commission.

(2) Any income, capital or other benefit received in respect of moneys held or invested by the Commission shall be paid into the Fund and held or invested for the benefit of the Fund in accordance with subsection (1).

Payments from Fund to Exchequer.

20. —(1) The Commission shall not make any payment from the Fund to the Exchequer before the year 2025.

(2) Subject to this section, in each year, commencing in the year 2025 and continuing until the year 2055, the Commission shall make payments from the Fund to the Exchequer, upon the request of the Minister, in respect of social welfare pensions and public service pensions.

(3) The Minister may, after consultation with the Minister for Social, Community and Family Affairs, at any time, by order extend beyond the year 2055, the period for payment from the Fund referred to in subsection (2).

(4) The Minister shall, following consultation with the Commission and the Minister for Social, Community and Family Affairs, make rules under which payments from the Fund under subsection (2) shall be calculated during the relevant period.

(5) Without prejudice to the generality of subsection (4), rules under that subsection shall provide that payments from the Fund shall be calculated—

(a) by reference to the projected increase in the number of persons in the State who should have attained the age of 65 years, during the relevant period, as estimated by the Minister following consultation with the Central Statistics Office, and

(b) with a view to avoiding undue variations from year to year in the net Exchequer position arising from payments to and receipts from the Fund.

(6) Payment from the Fund to the Exchequer in any year shall not exceed the total Exchequer outlay on social welfare pensions and public service pensions in that year.

(7) The Minister may by order amend or revoke an order made under this section (including an order under this subsection).

(8) In this section “relevant period” means from the year 2025 until the year 2055 or such further period as extended by order made under subsection (3).

Manager of Fund.

21. —(1) The Commission shall appoint a manager of the Fund, in this Act referred to as the “Manager”, to act as its agent in the performance of its functions under the Act.

(2) On the establishment day, the Commission shall appoint the Agency to be the Manager for a period of 10 years.

(3) After the period referred to in subsection (2) and after each period of 5 years thereafter, the Commission, acting in consultation with the Minister and with his or her consent, may appoint the Agency, or such other person as it considers to be best qualified, to be the Manager for a period of 5 years.

(4) The Manager shall supply the Commission with such information, advice and assistance regarding the responsibilities of the Commission and the activities of the Manager, investment managers, custodians and any other adviser or service provider engaged by the Commission, as the Commission may, from time to time, require.

(5) The Manager shall have all such powers as are necessary or expedient for the performance of its functions under this Act.

(6) Subject to section 26 (2), a function of the Agency under this Act shall not be considered as a function of the Agency under the National Treasury Management Agency Act, 1990 .

(7) Where a person ceases to be the Manager, the person shall, immediately upon so ceasing, surrender to the Commission all books, documents and records (including any information stored, maintained or preserved by means of any mechanical or electronic device, whether or not stored, maintained or preserved in legible form) and anything else used in the administration of the Fund which is not the property of the person.

Appointment of investment managers and custodians.

22. —(1) The Commission may, from time to time, appoint such persons (“investment managers”) to invest and manage such portions of the Fund as the Commission deems appropriate on such terms and conditions as the Commission deems appropriate, including the following—

(a) the investment mandate to be given to the investment manager, including discretionary powers for the investment manager,

(b) an indemnity to the investment manager with respect to any depreciation or loss in assets under his or her control save for wilful default, fraud or negligence by the investment manager,

(c) the appointment by the investment manager of agents to act for it in the performance of its duties and functions, subject to the consent of the Commission in the case of investment decisions,

(d) the exercise of voting rights by the investment manager on behalf of the Fund,

(e) general reporting arrangements, and

(f) management fee, commission and other expenses payable to the investment manager.

(2) Notwithstanding subsection (1), the Manager may be appointed by the Commission to invest and manage such portions of the Fund and on such terms and conditions as deemed appropriate by the Commission within the context of the investment strategy adopted by the Commission.

(3) The Commission may, from time to time, appoint persons (“custodians”) to act as custodians for the assets, or portions of the assets, of the Fund on such terms and conditions as the Commission deems appropriate.

(4) In evaluating prospective investment managers or custodians for the purpose of this section, the Commission shall, inter alia, have due regard to their—

(a) investment or custodianship expertise, as appropriate,

(b) risk management systems and other information systems and technology, as appropriate,

(c) corporate structure,

(d) reporting capabilities,

(e) financial strength,

(f) internal ethical and compliance guidelines,

(g) external regulatory obligations, and

(h) management fee, commission and other expenses.

(5) The Commission shall seek to ensure in the contracts for the appointment of investment managers or custodians that they—

(a) operate to the highest standards acting honestly and fairly, and with due skill, care, prudence and diligence, in conducting their business activities under the mandate given to them so as to promote the best interests of the Fund,

(b) employ effectively the resources and procedures that are necessary for the proper performance of such business activities,

(c) make every effort to avoid conflicts of interest and to declare any such conflict to the Commission, and

(d) are subject to an appropriate regulatory regime.

(6) In appointing an investment manager, a custodian or the Manager for the purposes of this section, the Commission may include a provision in the relevant contract, or letter of appointment in the case of the Manager, enabling it to engage auditors, from time to time, to carry out an audit of the books, accounts and other financial statements of the investment manager, custodian or Manager, as the case may be, in so far as they relate to activities of the investment manager, custodian or Manager under this section. The investment manager, custodian or Manager, as the case may be, shall afford access to the auditors to all records, documents and accounts relevant to assets of the Fund under his or her control.

Expenses of Agency.

23. —The expenses of the Agency in the performance of its functions as Manager shall be charged on and paid out of the Central Fund or the growing produce thereof.

Laying of draft orders, regulations ,and rules under Part 3.

24. —A draft of every order, regulation or rule proposed to be made under this Part shall be laid before Dáil éireann and the order, regulation or rule shall not be made until a resolution approving the draft has been passed by Dáil éireann.