Long-term bond yields drive Irish funding level

IRELAND - Irish corporate pensions' funding levels have improved by 20% since the beginning of this year because of increasing long-term bond yields, according to consultants Mercer.

"Recent increases in long-term interest rates combined with continued growth in equity markets have seen pension funds post exceptional gains in 2007," Mercer said in a release today.

The survey of Irish pension funds, conducted by firm's Financial Strategy Group (FSG), said the gain in funding level reduces the funds' debt to pension find participant by around €2bn.

Mercer argues next to asset growth, the main driver to gains has been an increase in long-term bond yields, which has seen liabilities fall by almost 12%.

"It is likely that a majority of large corporate pension funds will post surpluses in accounts struck at today's date," said Mercer.

However, Liam Quigley, head of Mercer's Irish FSG group, alsoi commented: "We think that many pension fund sponsors are not yet aware of the significance of recent market movements."

He added: "In many cases, companies should be looking at ways to lock in gains and reduce the risk of deficits arising again going forward."

Have your say

You must sign in to make a comment


Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2492

    Asset class: Active Investment Grade Corporate Bond.
    Asset region: Global.
    Size: In the region of £2 billion.
    Closing date: 2018-12-10.

  • QN-2495

    Asset class: Large & Mid & Small with bias to Mid Equities.
    Asset region: Switzerland.
    Size: CHF 30m.
    Closing date: 2018-12-10.

  • QN-2496

    Asset class: Commodities.
    Asset region: World.
    Size: CHF 100 – 150 m.
    Closing date: 2018-12-12.

Begin Your Search Here