S&P Global Broad Market Index (BMI): Developed, August 2010 (US$)

Irish pension funds face a return to funding difficulties according to Hewitt Associates, the global pensions consultants, on Wednesday. Meanwhile, in New York, Standard & Poor's reported that in August, twenty-three of the 25 developed markets declined in August, with both Greece and Ireland posting double-digit declines.

Hewitt said on releasing its monthly investment performance figures for the month of August 2010 that falling French and German bond yields coupled with declining equity markets has left pension funds with the renewed prospect of funding difficulties. "The fall in bond yields has led to an increase in the liabilities of Defined Benefit Schemes", commented Betty O'Reilly, investment consultant with Hewitt Associates. "With declining equity markets leading to a fall in asset values, pension funds face a return to severe funding difficulties."

Market uncertainty surrounding the stability of the economic recovery saw global equities decline by 1.3% in the month of August.

"Investors are questioning whether the US economy can avoid slipping back into recession" said Betty O'Reilly. "Employment figures remain poor and markets are now looking to see what action the Federal Reserve may take."

Despite Europe's stronger economic prospects, Eurozone equities continue to perform poorly, falling by 3.8% over the month.

"Concerns still exist about European banks, and the peripheral economies face severe austerity programmes" O'Reilly said. "However, Irish investors in non-Eurozone assets have benefited from the decline in the value of the euro."

Eurozone bonds rose by 4.2% in the last month, with German and French bond yields falling sharply as investors continue to seek out a safe haven. In contrast, yields on Irish, Greek and Portuguese bonds increased during August.

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