Back Bench Revolt Over Pension Cut

The Taoiseach could be facing a backbench revolt over a mooted cut to the sate pension, according to reports this morning.

Brian Cowen yesterday said that "no vested interest", and "no section of our society", would escape the cuts this December, adding that the Government could no longer protect every aspect of health, education and social welfare spending.

After it emerged that this could include a cut in pensions, Fianna Fail backbenchers are said to be considering a revolt to halt any reductions in the payments.

Backbenchers were instrumental in the Government's earlier attempt to reduce the state's medical card provision, and the party's leadership will be concerned about losing the support from the party coming up to December's crucial budget.

Meanwhile today, Ireland's finance minister has been urged by senior advisers to allow the country's €24 billion state pension fund to buy Irish government bonds to support demand.

This morning, Labour leader Eamon Gilmore also suggested using money from the pension pool, which he claimed could be used to counter-balance the reductions in capital spending and fund a 'strategic investment bank'.

However, the pension funds are currently protect under law, and the Finance Minister Brian Lenihan would have to draft fresh legislation to free up the money to buy bonds.

The suggestion is particularly significant given today's news that the cost of borrowing for the Government has reached a record high.

This morning, investor yields being sought on 10-year Irish bonds rose to 7%, the highest it has been in the history of the euro, before settling back down to around 5%.

Greek and Portuguese bonds are also under similar pressure this morning.

Senior dealer at National Irish Bank Owen Callan said that market sentiment is still turning against Ireland.

Senior analysts believe that using the pension fund could decrease Ireland's payment costs by increasing international confidence and easing the interest rate on the State's debt.


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