Pensions Reserve Fund (France)

Fonds de Réserve pour les Retraites - FRR - (French Reserve Fund)
public owned State-funded agency
Industry Investments
Founded July 17th, 2001
Headquarters Paris, France
Number of employees
 48
Website http://www.fondsdereserve.fr/en

The French Reserve Fund (Fonds de Réserve pour les Retraites ou FRR)[1] is an administrative public establishment created by law n°2001-624 dated 17 July 2001. Its mission is to invest monies entrusted to it by the public authorities on behalf of the community with the aim of financing the pension system. Its investment policy is to optimize returns on the investments it makes as prudently as possible. Its policy must be consistent with those collective values that are designed to promote balanced economic, social and environmental development.

Assets under management

At December 2014 the FRR's assets are 37.2 billion Euro.

History

At its creation the target was to build a reserve fund of 150 billion Euro by 2020. The funds were to come from 4 sources:

After initially receiving funds from the FSV and 1.2 billion from the provatisation of the Autoroute company (Autoroutes du sud de la France) since 2003 the fund has been funded mainly by 65% of the investment tax of 2%. The fund was set up to guarantee financial stability of:

First payments were set to start in 2020.

Details on the FRR's role

The FRR is a long-run investor. Its mission as conferred by law is to “manage the sums that are allocated to it, to build up reserves to help ensure the long-term future of eligible retirement plans”. The Fund is also responsible for the financial management of a portion of the exceptional, one-off, lump-sum contribution owed to the CNAV (Caisse Nationale d'Assurance Vieillesse).

The FRR’s liabilities consist of annual payments to the CADES of EUR 2.1 billion until 2024, and a single payment to the CNAV in connection with the CNIEG balance in 2020 indexed to the FRR’s performance.

The government has set out a timetable for the payout of the Fund’s assets. Under the terms of the social security financing law 2011,“the sums allocated to the Fund are held in reserve until 1st January 2011. As from this date and up until 2024, the Fund shall each year, and at the latest by 31 October, pay 2.1 billion euros to the national social debt amortization fund (Caisse d’Amortissement de la Dette Sociale - CADES) to help finance, between 2011 to 2018” the deficits of the entities that administer the basic pension.

On this basis the FRR determines the general investment policy guidelines consistent with“the principles of prudence and risk diversification given the target timetable for utilisation of the Fund’s resources, in particular the above-mentioned payout obligations”.In its implementation, the aim of the FRR’s investment policy is also to help finance economic actors in general and businesses in particular. This in turn helps to consolidate their prospects for long-term growth and promote sustainable wealth creation and job growth. At the same time, it is consistent with certain shared values that promote balanced economic, social and environmental development. In 2008, the Supervisory Board adopted a responsible investment strategy which seeks to enable the Fund to honour its commitments as a signatory to the UN’s PRI (Principles for Responsible Investment).

Activity

The management of its assets is entrusted to authorized investment services providers permitted to conduct portfolio management services on behalf of third parties as referred to in paragraph 4 of article L.321-1 of the monetary and financial Code. As an administrative public establishment, the FRR is required to select its contractors using the French government procurement process (RFP procedures). The employees are mainly coming from the asset management industry, and are specialised in investment services providers selection.

FRR's organisation

The FRR is a publicly owned, state-funded agency governed by

Governance Presentation of the FRR

Consistent with its stated purpose and in light of the volumes of funds it manages, the FRR has set up structures of management and government intended to ensure:

The Supervisory Board of the FRR

Supervisory Board members include legislators, labor/management stakeholders, representatives of the ministries under whose general supervision the FRR operates (i.e., the ministries of Social Security and of the Economy, Finance and Industry) and individuals with recognized credentials in fields that are relevant to Fund’s stated missions. The Board, which currently counts twenty members, is required to meet a minimum of twice yearly.

Since November 24th, 2011, Alain Vasselle is the President of the Supervisory Board of the FRR.

The Executive Board

The Executive Board has three members:

The Executive Board is responsible for directing the agency and for ensuring its smooth operation. It executes investment policy guidelines and ensures compliance with them. The Executive Board reports regularly to the Supervisory Board on its management of the agency, and in particular relates information on the way in which investment policy guidelines take into account social, environmental and ethical considerations.

Management Structure Chart

Official links

References

  1. ↑ "Home – Fonds de réserve pour les retraites". Fondsdereserve.fr. Retrieved 22 April 2011.
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