Whatever it takes

1 November 2010 By Neil Unmack Follow @unmack1

Government advisers think the state pension pot should be forced to buy sovereign debt. The 18 billion euro fund could help Ireland finance its monster deficit, but the political cost could be great. Besides, the country isn’t that desperate for money right now.

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Senior advisers to the Irish government have recommended it instruct the state reserve pension fund to buy sovereign debt to ease the county's debt crisis, Reuters reported on Oct. 27.

Ireland's department of finance said: "There are no proposals to do this."

The National Pensions Reserve Fund, which manages about 25 billion euros of assets, is currently forbidden from buying Irish government debt.

It was set up in 2001 to build a reserve for pensioners retiring from 2025 onwards. Around 18 billion euros is invested in a range of financial assets. The remaining 6.6 billion euros is in the form of direct investments in Allied Irish Banks and Bank of Ireland, which the government ordered the fund to make.

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