Ireland’s Sovereign Wealth Fund is a Tale of Missed Potential

We could have been Norway

Over the past decade, Ireland has collected extraordinary sums in corporation tax. It has mostly come from multinational companies like Apple, Google, and Meta, which have based their European operations in Dublin to take advantage of Ireland’s favourable tax environment. These receipts have grown more than sevenfold since 2014, producing budget surpluses that no Irish government in recent memory has had to manage.

There are several ways in which Ireland’s political economy resembles that of a wealthy but resource-cursed nation. Instead of oil or diamonds or zinc, our “resource” is a windfall of corporation tax.

The question of what to do with all this money has been the defining fiscal debate in Ireland for the better part of a decade, and in 2024, the Government answered. Two new sovereign wealth funds were legislated into existence: the Future Ireland Fund (FIF), designed to build up assets for future generations, and the Infrastructure, Climate and Nature Fund (ICNF), designed as a buffer against economic downturns. They are projected to be worth €23 billion by the end of this year, and are managed by the National Treasury Management Agency (NTMA). The debate over what to do with this money, it seemed, was settled.

Creating these funds was an achievement. But the design choices that followed – how much to contribute, how to invest it, and what rules should govern its eventual use – matter enormously. Many of them are seriously flawed. These issues must be fixed quickly if they are to be fixed at all, before the corporation tax revenues that made the fund possible stop flowing.

What Ireland built

Ireland’s fiscal position is structurally unusual in ways that make design choices matter more than they would in a typical sovereign fund context.

In 2024, Apple paid €13 billion worth of corporation tax to Ireland, after it was ruled that the previous regime by which they were paying minimal corporation tax was in violation of EU State Aid rules. This turbocharged Irish corporation tax receipts, which that year hit €39 billion, or 36% of all tax revenue. A decade ago, corporation tax was around 10% of total tax receipts. The Irish Fiscal Advisory Council (IFAC) now estimates that three firms account for 46% of all corporation tax; the exposure is acutely concentrated.¹

Any Irish economist worth their salt has been arguing for years that this windfall needs to be saved rather than spent. Budget 2024 was the government’s response: two new funds, both overseen by the NTMA, with distinct mandates. The FIF is the long-horizon vehicle, locked until 2041 and targeting €100 billion in value by 2035, currently being invested by four external passive managers across global equity and bond markets. The ICNF serves a different purpose: rather than maximising long-run returns, it is designed to be a reliable source of cash in a downturn, prioritising stability and accessibility over growth. It targets €14 billion by 2030, and can be drawn on from 2026 for designated environmental projects or when the economy turns.

This is a smart set-up. The standard recommendation by the IMF and World Bank is to pair a savings fund with a stabilisation fund when setting up a sovereign wealth fund. The drawdown mechanism is also well designed: section 11 of the Act caps annual withdrawals from the FIF at 3% of net asset value from 2041. It also prohibits any drawdown that would reduce the fund below its contributed capital, meaning only investment returns can be accessed. This represents a meaningful constraint on future governments.

While Ireland got the big picture right, the details are where it starts to go wrong.

Design flaw one: the contribution rate

The FIF currently has an annual contribution of 0.8% of GDP, which may sound like a lot. However, measured against Ireland’s actual fiscal position, it is not a particularly onerous commitment to saving for the future.

The problem is that the contribution was calibrated to the size of the economy, rather than to the size of the windfall. The whole point of the FIF was that Ireland had received a corporation tax bonanza largely unconnected to domestic economic activity. The contribution should have been set as a share of those excess receipts: the gap between what Ireland would normally collect and what it is actually collecting thanks to multinational profit booking.

It is well known that Irish GDP is artificially high as a result of the way that multinational firms record their profit. Most policies linked to GDP for Ireland are set instead with respect to a corrected measure, modified gross national income (GNI*). The details of that are worth a Fitzwilliam post of their own, but what’s relevant here is that GDP is a much larger number; last year 1.8x as high.

The predecessor of the Irish sovereign wealth fund is the National Reserve Fund, created in 2019 and universally referred to by the media as the “rainy day fund”. It was dissolved in 2024, and its €6.3 billion worth of assets were transferred to FIF and ICNF in a 2:1 ratio. After that, the regular contribution kicked in. This is where we see how inadequate the savings are: in 2025, Ireland collected €32.9 billion in corporation tax and saved €6.1 billion of it, or 18.5%.² The state is saving less than a fifth of its windfall and spending the rest.

There are already signs of deterioration. IFAC has stated that they expect only one in every six euros raised by corporation tax to be saved between now and 2030. Government spending is currently rising by 6% per year; if this continues, the state will be in the ironic position of being forced to borrow just to meet its sovereign wealth fund obligations.

PROPOSED AMENDMENT ONE: A STATUTORY WINDFALL RULE

Define baseline corporation tax receipts as a rolling 10 year average. Mandate by statute that all receipts above this baseline are automatically transferred to the FIF in the same fiscal year, without requiring annual political approval. The 0.8% of GDP contribution becomes a floor, the minimum in years when receipts are at or below baseline, rather than a ceiling that substitutes for genuine windfall capture. In years like 2024, this mechanism would have directed an additional €10-15 billion to the fund rather than to the operating budget.

Of course, any statutory windfall rule passed by the Oireachtas today could subsequently be repealed or amended by a subsequent Oireachtas with a simple majority. But this does not make a statutory rule pointless. Norway’s handlingsregelen is the budgetary rule which caps the drawdown from the sovereign wealth fund at its long-run expected annual return in real terms – currently 3%. It is not constitutionally entrenched either; it is a political convention backed by statute, and it has survived a quarter-century of governments due to the fact that it is simple, visible, and politically costly to violate. Ireland’s 2008-2011 experience, when the National Pensions Reserve Fund was raided because nothing legally prevented it, is the cautionary precedent.

Design flaw two: the fund’s liquidity

The FIF’s long-term investment strategy, published by the NTMA in early 2026, targets an 80/20 split between equities and fixed income (mostly bonds), implemented through passive managers tracking global indices. This would be a reasonable portfolio for a pension fund with moderate liquidity needs and a mixed horizon. It is not the right portfolio for a sovereign fund that cannot be touched for 15 years and is designed to function as an intergenerational savings vehicle.

Financial markets have a significant ‘illiquidity premium’: you get a higher return on investment if you are willing to hold assets that can’t be sold on demand. Private equity has historically outperformed public equities by around 3-4% annually, although how much of this reflects the illiquidity premium per se is complicated and contested.

The FIF should be taking advantage of this: a fund that cannot be accessed for 15 years has no need for the liquidity of public equities. Private equity funds typically lock up capital for 7-12 years, so the FIF’s 15-year horizon comfortably accommodates this. My back-of-the-envelope calculations suggest investing in illiquid assets could increase the fund’s value by around €10 billion.³

It’s not just a question of how much risk and illiquidity you are willing to bear to get a higher return. The standard framework in long-horizon investing tries to match investment returns to when the investor will face liabilities. Infrastructure investments like toll roads, energy grids and data centres all generate stable long-term cash flows almost perfectly matched to the FIF’s objective of supporting recurring government expenditure from 2041.

Norway is the benchmark every sovereign fund aspires to. However, it is not the perfect comparison. Norway’s fund is so large, at approximately $2 trillion,⁴ that deploying meaningful capital into private markets without distorting prices is almost impossible. There are other political and cultural reasons why Norway has decided not to invest in private markets.

The FIF does not have these problems: Singapore’s GIC and New Zealand’s Superannuation Fund are the more relevant comparators. The GIC allocates approximately 45% to alternatives including private equity, private credit, infrastructure, and physical assets. Similarly, New Zealand’s Superannuation Fund runs approximately 30% in alternatives and has added almost 1.4% per annum above its passive reference portfolio since inception, a premium that, compounded over the FIF’s remaining runway, will be worth billions by 2041.

The NTMA’s stated position is that it wants to build internal governance and risk oversight capacity before committing to complex long-horizon mandates. This is a justifiable position: without that internal capability, you are outsourcing both the investment and the oversight, which inherently creates its own risks. Building it takes time for reasons that are mainly structural: the NTMA cannot easily compete with private sector compensation for experienced alternatives investors, and establishing the relationships and track record needed to access top-quartile funds, many of which are closed to new investors, cannot be rushed.

That said, it remains a choice, and the cost of going slowly is high. Private market programmes take years to build and deploy, and early investments show paper losses before generating returns. The later it starts, the smaller the programme’s contribution by 2041. The NTMA should be moving faster, and the case for publishing a clear timeline for the alternatives ramp is partly about forcing that internal urgency.

PROPOSED AMENDMENT TWO: PHASED ALTERNATIVES ALLOCATION

The NTMA should publish a 5 year alternatives ramp, targeting 15% of FIF assets in private markets by 2028 and 30% by 2032, distributed across private equity, infrastructure, and private credit.

Design flaw three: the international mandate

There is nothing in the FIF’s investment mandate that prevents the government from directing it toward domestic assets. The NTMA’s stated intention to “invest globally across a number of asset classes and regions” is a preference that is not binding by any means. In a country with an acute housing shortage, a strained health service, and infrastructure that has visibly lagged investment for decades, the temptation to point a growing sovereign wealth fund at domestic problems will only get stronger. The economic case against doing so is specific to Ireland’s circumstances. Ireland is a small, open economy already running hot. Injecting additional state capital into domestic construction, infrastructure or equities would add demand to an economy with well-documented supply constraints, making the underlying problems more expensive rather than solving them. The IFAC has also warned about this.

There is also a more structural argument which supports this international mandate. The entire point of the FIF is to give Ireland a financial buffer that moves independently of the domestic economy. If corporation tax receipts collapse because a major multinational restructures, because U.S. policy shifts or because the global minimum tax changes the calculus for profit booking in Dublin, the fund is supposed to cushion the blow. A fund invested primarily in Irish assets will not do this by any means. We would see Irish asset values falling in exactly the same scenarios that we would see Ireland’s tax revenues being reduced. The buffer only works if it is genuinely diversified away from the Irish economic cycle.

NTMA already manages a different fund as a vehicle for domestically mandated sovereign investment, namely the Ireland Strategic Investment Fund (ISIF), which was reconstituted from the National Pensions Reserve Fund in 2014. There is no gap that FIF domestic investment would fill that ISIF is not already designed to fill. If preserved, the architecture would be: domestic development capital through ISIF, international savings through the FIF, and more liquid but lower-return savings through the ICNF. These distinctions need to be made explicit and statutory to prevent the opportunity for political pressure to quietly erode it.

The Ireland Strategic Investment Fund is sometimes described as a “sovereign wealth fund”, and it is the only Irish body in the International Forum of Sovereign Wealth Funds. The term is inherently vague, but the Future Ireland Fund is structurally closest to the Norwegian sovereign wealth fund.

PROPOSED AMENDMENT THREE: AN INTERNATIONAL CONSTRAINT

Amend the FIF’s investment mandate to require that at least 90% of assets be held in non-Irish securities at all times. This mirrors Norway’s model: their Government Pension Fund Global must be invested entirely abroad. Any proposal to exceed 10% of the fund being invested in Ireland should require a published NTMA assessment of inflation risk and correlation risk before parliamentary approval.

Design flaw four: accountability

The three design flaws which I have spoken on, in principle, are fixable with legislation. The fourth is substantially harder.

Saving money that voters cannot access for fifteen years is a difficult political sell in any democracy. The fiscal looseness of 2026 is the first concrete sign that political commitment to the fund is softer than the legislation implies.

Norway is once again the obvious comparison, with a clear framework for their sovereign wealth fund that makes any deviation immediately visible and publicly attributable. The 3% rule is simple enough that any journalist can check it, and breaching it is a political event rather than a technical footnote.

Ireland has no equivalent. The NTMA publishes annual reports, investment strategies are public, and parliamentary oversight exists, but none of this produces the single salient number that makes Norwegian-style discipline stick. Ireland needs a published figure which is updated every budget, showing how much of that year’s excess corporation tax was saved versus spent and how far the cumulative saving has deviated from what a windfall rule would have mandated, where visibility is the key to increased discipline in sovereign saving.

PROPOSED AMENDMENT FOUR: A WINDFALL SCORECARD

Require the NTMA and IFAC to jointly publish, alongside every Budget, a Sovereign Fund Scorecard showing, the actual FIF contribution that year; the contribution that a windfall rule would have mandated; the cumulative gap between the two since 2024; and the projected fund value in 2041 under both paths.

This would be purely informational, but it makes the cost of fiscal slippage legible to anyone who reads the budget documents, which is how Norway’s 3% rule became a constraint that no government can ignore. Ireland should build its own version before the habit of treating the surplus as a spending resource becomes too entrenched to break.

What comes next

The FIF is a genuine achievement that Ireland can be proud of. Politicians looked at an unprecedented fiscal windfall, recognised that spending it all would be a mistake and, as a result, built an institutional vehicle to hold some of it for the future.

Having said that, the job is nowhere near finished. The contribution rate captures a fraction of the actual windfall and is already falling. The investment strategy is more conservative than a fifteen-year lockup warrants, and the gap between what the fund is earning and what it could earn is widening every year that the alternatives programme is delayed. There is also nothing statutory preventing the FIF from being redirected toward domestic investment. The four amendments proposed here are what I, as a humble trader, would suggest are the logical completion of what the government has already committed to.

It would be a mistake to assume the window for policy change stays open. The OECD’s global minimum corporation tax is gradually changing the calculus for multinationals booking profits through low tax jurisdictions. Washington’s appetite for bringing corporate activity back onshore is real and growing. The Irish government has no control over either of these forces, and while neither spells an immediate end to the corporation tax boom, both are moving in the same direction. The fund needs to be built properly while the money is coming in, because the political argument for these amendments is straightforwardly easy right now. The longer we wait, the harder it gets.

Conor Burns is a trader at Goldman Sachs. He studied maths and economics at Harvard, and is originally from County Down, Northern Ireland.

1. Sam Enright for Progress Ireland has written about the economic incidence of this corporation tax. It is far from trivial to work out who exactly this money is coming from, in the final analysis.

2. Importantly, most recordings of corporation tax payments report the one-off Apple payment separately, which was paid out mostly in 2024, but was still in the process of being transferred from an escrow account into 2025. The total corporation tax for 2025, including the Apple payment, was closer to €35 billion.

3. Private credit offers bond-like income with yield premiums of 1.5-3% over comparable public bonds. Applied to a 30% allocation on a €100 billion fund, even a conservative 2% illiquidity premium compounds to somewhere in the region of €7-10 billion in additional value by 2041, a premium that a fund exclusively invested in public assets would not have access to.

4. To give you a sense of how enormous that is: the Norwegian sovereign wealth fund owns an average of 1.5% of every listed company on earth.