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Irish funds in “precarious” position – Mercer

IRELAND – Around 80% of Irish pension funds fail to meet minimum solvency requirements, according to a survey of 250 clients conducted by Mercer Investment Consulting – though the regulator disputes this.

“Approximately 80% of respondents fail to meet minimum funding solvency requirements,” Mercer said.

“With assets underperforming and liabilities rising faster than expected, this double blow has left the majority of pension funds in a precarious funding position, with many now embarking on a series of funding proposals to the Pensions Board.”

Late last year the regulator relaxed its stance on pension funding, amending guidelines under which trustees can apply to extend the time pension schemes have to make good any asset shortfall.

Mary Hutch, head of information at the Pensions Board, declined to comment on the Mercer survey. She said that as of the end of March this year 22% of schemes “did not satisfy the funding requirements” of the Pension Act.

She said that in the year to the end of March, the board had received 444 applications for actuarial funding certificates. Of those, 98, or 22% failed to meet funding standards.

Forty-four have been allowed three and a half years to get back to full funding while 14 qualified for a longer period to return to full funding. And 10 schemes were under review. Hutch declined to name the schemes.

Mercer’s findings come as group managed funds performed “poorly” in March. “Group pension managed funds performed poorly over the month of March, with the average fund returning -0.2%,” said Buck Consultants.

But it found that returns for the first quarter were positive due to gains made in January and February. The firm said the average managed fund returned 3.8% in the first quarter.

The 12-month return to the end of March is 22.7%, it added. The three-year return to the same time is –2.2% a year.

Meanwhile, Michael McNulty has taken over as chairman of the Pensions Board from Grainne Clohessy. Anne Maher remains chief executive.

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