IRELAND - Falling yields on French and German bonds, coupled with declining equity markets, led to an increase in liabilities in Irish defined benefit schemes in August, according to Hewitt Associates.

Euro-zone bond prices overall rose by 4.2% in August, driving French and German bond yields down sharply, as investors sought a safe haven.

But Irish, Greek and Portuguese bond yields increased during the month as their bond values plummeted due to concerns about peripheral euro-zone economies and their austerity programmes.

Betty O'Reilly, an investment consultant at Hewitt, said: "Concerns still exist about European banks, and the peripheral economies face severe austerity programmes.

"With declining equity markets leading to a fall in asset values, pension funds face a return to severe funding difficulties."

Global equities declined by 1.3% in August, while euro-zone equities fell by 3.8% over the month.

The Hewitt Managed Fund index, an indicator of the performance of traditional Irish pension managed funds, fell by 0.6% in August.

 

Topics