Irish Life sells €20m bond product to defined benefit pension scheme

Irish Life has sold a sovereign annuity bond with a value of roughly €20m to a defined benefit pension scheme.

Last summer, the National Treasury Management Agency said it would issue up to €5bn of amortising and inflation linked bonds to attract Irish pension funds to Irish debt.

Linked to Irish government bonds, these products offer higher yields than are available from the German and French bonds, which traditionally underpin annuity products, said Irish Life.

This €20m investment is being used to enhance the funds available to a defined benefit pension scheme and for existing users of the scheme who are being transferred to a defined contribution scheme.

David Harney, chief executive of Irish Life Corporate Business, said: “Sovereign annuities have been eagerly anticipated by the market and give new options to trustees looking to restructure defined benefit schemes. We are in advanced discussions with a number of other corporates on the purchase of these annuities and we expect to close a number of similar transactions in the first quarter.”

Vincent Boyle of Allied Pension Trustees said: “Although the yields available on Irish government bonds have fallen dramatically in the last few months, there are still significant savings on sovereign annuities against traditional annuity products. The NTMA is targeting to raise over €3bn in the next couple of years from Irish pension schemes investing in sovereign bonds and sovereign annuities.”