DUBLIN - Money managers running assets for the Irish Republic's e8 billion ($8.01 billion) National Pension Reserve breathed a collective sigh of relief this month after Finance Minister Charlie McCreevy ruled out suspending contributions to the plan.
Mr. McCreevy had been under intense pressure from trade unions, economists and opposition parties to suspend the payments in order to prevent the Irish republic's finances from sliding into deficit this year.
A slowdown in the economy, a 21% surge in public spending and a 13.4% decline in tax receipts in the first half is expected to force Ireland into a budget deficit of between e500 million and e1 billion in 2002.
The government's annual payments into the pension reserve, amounting to 1% of gross national product annually, were expected to rise to almost e1 billion this year. The national reserve was established last year as a measure to provide Ireland's public sector employees with a means of retirement income.
"We were anticipating there was going to be good mandate growth and good positive cash flow as a result of the funding position, so this decision will be welcome by all the managers running funds," said Frank Doyle, the head of global consultant relations at Dresdner RCM Global Investors, London, which manages about e420 million for the plan.
"With markets going down and fee income for fund managers sliding, anything that means the assets of this client will continue to grow is a good thing," he said.
Mr. McCreevy made the announcement at a briefing of trade unions in Dublin in July.
