GLOBAL – The impact of a pandemic of avian influenza on pension funds is currently impossible to predict, according to a forum of global central bank and finance ministry chiefs.

“The impact on the balance sheets of pension schemes would depend critically on the demographic profile of the illness, which at this point is impossible to predict,” the Financial Stability Forum said.

“Relatively high mortality among the working-age population could worsen the funding deficits now faced by many defined benefit plans.

“If a pandemic brings lower equity returns and lower risk-free rates, this would also worsen funding profiles.

The comments come in an 11-page note – ‘Macroeconomic and financial stability issues raised by a global influenza pandemic - following a recent forum meeting in Sydney. Last month the International Monetary Fund said pension industry regulators may have to swing into action in the event of a bird flu pandemic.

The FSF has now said that “although the uncertainties relating to the timing, severity and impact of a pandemic are substantial, financial authorities need to consider well in advance the potential impacts of a pandemic on financial systems”.

They needed “to make business continuity plans for their own institutions, to review business continuity plans elsewhere in the financial sector and to improve channels for communication and coordination, both within and across borders”.

Last month, CEIOPS, the Committee of European Insurance and Occupational Pensions Supervisors, will monitor the avian influenza situation as it evolves.

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