IRELAND – Irish telecoms firm Eircom has cut the long-term rate of return expectations for most of its 2.1 billion euros of pension assets under the FRS17 measure.
The company said it has cut the long-term rate of return expected as at March 31 this year to 7.5% on its 1.42 billion-euro equities portfolio – down from 7.75% last year and eight percent in 2002.
The equities portfolio has grown from 1.03 billion euros in 2003 but is lower than 2002’s 1.48 billion euros.
Bond return expectations were cut to 4.5% from 4.75% in 2003 and five percent in 2002. The scheme’s bond portfolio has fallen to 248 million euros from 294 million euros a year ago and 349 million euros in 2002.
The expected return on the 334 million-euro property portfolio was cut to six percent from 6.25% and 6.5% in 2002.
Scheme liabilities have risen to 2.36 billion euros from two billion euros last year and 1.81 billion euros two years ago. Under FRS17 the scheme has a 292 million-euro deficit, down from a 325 million-euro deficit in 2003. In 2002 it had a surplus of 359 million euros.
The scheme has cut its discount rate assumption to five percent from 5.5% in 2003 and 6.10% in 2002.
Eircom said the last actuarial valuation of its main scheme was carried out using the attained age method, as at 31 March 2002 by Mercer Human Resource Consulting.
It added: “The primary financial assumption underlying the actuarial valuation was that the Scheme's investments will earn a real rate of investment return, over and above salary inflation and pension increases, of 2.5% per annum.”
It said the actuarial valuation of the scheme’s assets “was sufficient to meet more than 100% of the value of the scheme's accrued liabilities making due allowance for future increases in salaries and pensions”.