France joins Ireland in ‘raiding national pension fund’

France has reportedly passed a law to use the assets in its €36 billion national reserve pension fund to pay off welfare system debts, as Ireland tapped its own reserve pension fund to supplement an EU-IMF bailout.

The assets of the French pension fund, the Fonds de réserve pour les retraites, have been moved into the agency in charge of refinancing the country’s social debt, Cades, Financial News reported.

According to the newspaper, the fund will continue to control the assets, but as a third-party manager on behalf of Cades.

The report came shortly after it emerged that debt-ridden Ireland will contribute €17.5bn to its own rescue – some of which will come from its National Pension Reserve Fund, a sovereign wealth fund that had €24.5 billion under management at the end of September.

News of the French move is likely to lead to unwelcome comparisons between the two nations, amid fears that Ireland’s debt crisis may spread to other eurozone nations.

France’s budget minister, Francois Baroin, insisted yesterday that his country was shielded from any possible contagion and that it was ‘neither threatened nor targeted.’

Meanwhile, the seizure of the French pension fund’s assets, which was included in the annual social security law that was adopted last week, will be published by the end of December after anticipated approval by the constitutional court, Financial News reported.

The decision has prompted a radical restructuring of the fund’s investments, according to the paper. In the report, a source was quoted as saying that a new strategic investment plan will see a quick reduction in its 40% allocation to equities and a shift to cash and short-term government bonds.

Max Julius on Nov 30, 2010 at 09:06

http://citywire.co.uk/money/france-joins-ireland-in-raiding-national-pension-fund/a453669