IRELAND - Demand for Irish government bonds could be boosted by between €7bn ($9.8bn) and €10bn if sovereign annuity proposals are accepted, an economist has predicted.
The government is currently considering proposals put forward by the Irish Association Pension Funds and Society of Actuaries in Ireland to issue 10-15 year bonds in place of the current five year notes to make them more appealing to defined benefit funds. (Global Pensions: 20 July 2010)
Irish funds assess their solvency on the market price of annuities, which at present are priced off 10-year German bonds because of their duration, availability and security rating.
Brian Devine of NCB stockbrokers said: "There has been a lot of focus on the potential impact of a change to the Irish pension fund regulations. We conclude that it is difficult to derive a final demand figure, but we feel that if this proposal is brought forward, benchmarks are changed and legislation is altered that it could lead to a shift into Irish government bonds over a two year period of approximately €7-10bn on the view also that DB pension funds increase their fixed income exposure as seen in the UK more recently.
"To put this in context, we estimate that 2011 and 2012s funding requirement will be in the order of €25bn each year (these borrowing figures will change when the 4 year budget is outlined in November). These proposals are still currently being discussed between the vested interest and it is by no means certain they will be implemented."
PwC, KPMG, EY and Deloitte must break up their consultancy and audit businesses into distinct firms to provide greater focus on the "most challenging and objective audits", the competition watchdog has said.
The Department for Work and Pensions (DWP) has released its first batch of guidance setting out how the guaranteed minimum pension (GMP) conversion legislation may be used to resolve unequal payments.
This week's top stories include the government spending £800,000 on a Gogglebox advert and MPs writing to The Pensions Regulator about its engagement with the Railways Pension Scheme.