You are correct and the only way to do this is for a complete ban on domestic (i.e. IE) investment. This problem was pointed out when the NPRF was set up. But it was not taken on board and the fund was politicised.
Duke, you're making my points for me! All those cross-subsidies are among the reasons why people hate annuities. The state pension is seen differently. It's a tax while you're working; it's a benefit when you're retired.
As @NoRegretsCoyote intimates, people will associate this new scheme with property rights: "This is my account; I want to see it grow as I pay more contributions and as interest accrues; I want to spend what's in the account when I retire and, if I'm not around to spend it, I want it going to my family or my estate, not to the great unwashed."
Differences in mortality rates between rich and poor are significant and there is a real and systematic transfer of resources. I'm also happy to be a leftie if it helps my cause!