exporting countries, such as Abu Dhabi, Bahrain, Dubai, Kuwait, Qatar and Saudi Arabia, as well as in China, Russia and Singapore. They are therefore part of a broader international trend. This paper focuses on the experience of recently created public pension funds in four OECD countries: Norway, Canada, Ireland and New Zealand. All created new funds, transferred reserves, committed to make annual contributions, and promoted a modern framework for efficient investment performance.<sup>8</sup> Norway was the first of these countries to establish a new public fund. It created the Government Petroleum Fund in 1990 in order to invest in overseas markets the part of oil revenues (net of oil-related investments) that the authorities decided to save for the benefit of future generations. The Petroleum Fund was not initially formally set up as a pension fund although it was from the start expected to play an important part in meeting future demands on state pension expenditures. But in January 2006, the link was formally recognized and the Government Petroleum Fund was officially renamed the Government Pension Fund - Global (GPFG), reflecting the global orientation of its investments. There is also a Government Pension Fund - Norway, which manages the domestic, and much smaller, assets of the National Insurance Fund.

Norway followed the precedent created by Kuwait in the late 1970s, when it established the Kuwait Investment Office (KIO) with a remit to invest in overseas markets its fast accumulating foreign exchange reserves. In Norway the creation of the Petroleum Fund was motivated by the decision to preserve assets for future generations and avoid the Dutch disease effects that would likely ensue from immediate spending of the oil wealth. In some sense, Norway also followed the example of Singapore, which was able to accumulate large foreign exchange reserves in the 1970s as a result of the success of its export-led economic policies. The Singaporean authorities decided in the late 1970s to create the Government of Singapore Investment Corporation (GSIC) with the objective to diversify the investment of foreign reserves away from holding low-yielding US treasury bills and into high-return global equities as well as direct investment projects in various parts of the world.

A fundamental difference between the Norwegian fund and those of Kuwait and Singapore relates to transparency and public accountability. While the operations of KIO and GSIC have suffered from severe opacity, the Norwegian fund is required to operate with a very high level of transparency and accountability. The Ministry of Finance reports to Parliament on the performance of the fund. In addition, Norges Bank, which is responsible for managing the fund, holds press conferences every quarter on investment results and posts on its website comprehensive reports on its performance.

The creation of new public pension funds in the other three countries (Canada, Ireland and New Zealand) was specifically linked to the need to finance the anticipated large rise in pension outlays over the next 20 to 50 years. The Canada Pension Plan Investment

> 8 The analysis of the experience of the four pension funds is based on the annual reports produced by the four institutions (Norges Bank and NBIM 1999-2006, CPPIB 1999-2007, NPRF 2001-2006 and NZSF 2003-2006) as well as various presentations by government officials (Kjaer 2004, Maher 2004, MacNaughton 2004, and McCulloch and Frances 2004).

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