Recent rise in asset values more than offset by higher liabilities - Mercer

Issued : 17 July 2014

Although the assets of pension funds in Ireland increased by 9% on average in the first half of 2014 on the back of strongth growth in global equities, according to financial consultants Mercer, liability values rose by around 15% as a result of falls in yields from both government and corporate bonds (which are used as a reference point for valuing pension liabilities).

Mercer reports that accounting deficits have climbed to €7.6bn from €5.4bn – having previously narrowed in 2013 by €1.8bn.

While employers and trustees are keen to capitalise on the recovery in equity markets, finding a suitable place to invest is proving difficult with bond yields now at historic lows.

“More and more clients are looking for a half-way house between equities and long-dated bonds to capture equity gains until such time as bond yields hopefully increase,” said a spokesperson for Mercer.