The Irish Association of Pension Funds (IAPF) is fearful falling bond yields could entice pension funds and defined benefit contribution members to look for more volatile and riskier investment strategies that could leave them with losses should markets take a turn for the worse.
IAPF chief executive, Jerry Moriarty said the warning echoed that of the OECD earlier in the week when it warned that the current, low-growth, low interest rate environment, was making it difficult to earn the returns necessary to reach adequate pension levels.
“Research has shown that good progress has been made by pension scheme trustees in understanding and analysing investment risk.
"However, we would caution that with high asset valuations, trustees need to be conscious of the impact of potential losses, should markets suffer significant falls.
“This is particularly relevant as pension liabilities remain high due to the impact of low interest rates.
"In such an environment, good governance ought to ensure that risks are managed proactively and performance delivered within robust internal controls developed by good governance,” Mr Moriarty said.
Irish pension assets have recovered somewhat over the past number of years after being hit badly during the economic downturn.
Eurozone equities suffered a peak-to-trough fall in value of the order of 55% but Irish pension assets have since recovered from €63.5bn at the end of 2008 to €107.8bn at the beginning of the year.