Aon Hewitt Ireland says that Irish pension funds
declined in July.
Global equity markets fell in July as investors sold off risky assets in the
midst of uncertainty about the US debt ceiling and the Euro sovereign debt
crisis. Irish pension investors benefited from the
weakening Euro which mitigated the losses to some extent.
"Markets exhibited clear 'risk-off' behaviour in July," commented Denis
Lyons, senior investment Consultant with Aon Hewitt. "Equities fell
substantially while a flight to quality saw an increase in demand for core
Eurozone bonds. This led to declines in German and French government bonds
"Corporate earnings in the US were
overshadowed by the debate in Congress over raising the federal debt ceiling,"
noted Lyons. "The S&P 500 fell by 2.1% in June, though a strengthening dollar
improved returns for Euro based investors."
"Defined benefits plans suffered as falling bond yields saw the minimum
funding standard liabilities increase," added Denis Lyons. "Combined with
declining asset values, schemes' funding levels came under renewed pressure in
The Aon Hewitt Managed Index, an index
of traditional managed pension funds fell by 1.2% in
June. The index has fallen by 1.8% since the start of the year.
In the fixed income area, Irish funds are still
largely invested in the low yield bonds of core Eurozone countries.