IRELAND - Pegging defined benefit schemes' liabilities to Irish bonds instead of German and French bonds could significantly ease the burden of underfunding, said Aon Hewitt.
Although bond yields have increased following their sharp decline in August, German bond yields are still far below their levels at the beginning of the year offsetting the benefits gained from the rally in the equities markets, said Betty O'Reilly, senior investment consultant at Aon Hewitt.
"If the recently announced review of the funding standard leads to pension liabilities being measured by reference to Irish bond yields, the pressure would ease significantly given the current risk premium priced into Irish government bonds," said O'Reilly.
In October, Irish pension funds rose by 1.2% in October and 7.1% since the start of the year, according to the Aon Hewitt Managed Index.
O'Reilly said: "Equities have rallied over the last two months as investors anticipate that the U.S. Federal Reserve will announce a further round of quantitative easing in November. With a decision expected tomorrow, market reaction will reveal investors' level of confidence in the U.S. economic recovery."
The eurozone was the strongest performing market, returning 3.75% over October, said Aon Hewitt.
HMRC has confirmed providers operating relief at source pension schemes can continue to collect automatic tax relief at a basic rate of 20% under new Scottish Income Tax rules.
The Pensions Regulator (TPR) is seeking "improved" powers to set a schedule of contributions in defined benefit (DB) schemes in the government's upcoming white paper, it has revealed.
New regulatory rules which require providers and advisers to produce annuity illustrations will not solve the problem of consumer detriment as they are "fundamentally" flawed, according to Retirement Advantage.
Paul Budgen is set to join financial technology and auto-enrolment (AE) firm Smart Pension as director of business development.