SUB-PRIME CRISIS FALLOUT TO RESULT IN LONGER WORKING LIFE - The damage done by the international financial crisis originating in sub-prime lending in the US is so acute that it Is set to add an extra five years on to the working lives of the rest of us. That is because of the damage done to the value of companies which ultimately impacts on the value of pension funds.
UCD Professor of Banking and Finance, Ray Kinsella, says that the burden of risk associated with pension funds has shifted increasingly towards employees as defined benefit schemes are closed off to new employees or discontinued. The Professor says that the extent of the international credit crisis and its impact on the economy and of the value of companies who create jobs and incomes is only now becoming apparent. He says that will translate directly into a fall in the assets of pension funds. He says this is the most severe and protracted recession in living memory and the ramifications for the valuation of companies will go on for decades.
The Professor explains that the problem is compounded by the move by 'stealth' from a defined benefit to a defined contribution pension system, pushing the risk of an adequate pension provision onto individuals. When this is combined with the severe hits financial institutions have taken in recent months, the outlook is pretty gloomy, Dr Kinsella said. He says the fall in the assets of pension funds, combined with the fact that the risk is being transferred to individuals, means that people either have to save much, much more to guarantee an adequate income, or accept a lower standard of living or - the most likely outcome - people will be forced to work longer.
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FBD CEO DIES SUDDENLY - FBD has appointed its group financial director Andrew Langford as interim chief executive following the sudden death of CEP Philip Fitzsimons at the weekend. Mr Fitzsimons, who was 60 and leaves a wife and five children, had headed Ireland's only listed insurance company since 2003. He had spent all his working life with the company. FBD Chairman Michael Berkery said Mr Fitzsimons had devoted his entire career to building one of Ireland's most successful enterprises and he said his wise and considerate counsel and energy and passion would be missed.
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MORNING BRIEFS - The Bank of England is to announce plans today to stem the damage from the credit crisis on the British Banking sector. A £50 billion plan will see the Bank exchange mortgage debts held by the banks for valuable Government Bonds. The problem with mortgage debt currently is that it is a financial asset few investors are prepared to touch, and that means banks can not raise finance for lending and if people and businesses can not get credit then you have an economic disaster. Many, though, are critical that it is the UK tax payer who is bailing out the banks.
*** The price of oil hovers at record levels. New York crude went above $117 on Friday before falling to $116.69. However, analysts say it is set to go higher again following comments from OPEC that it will not be increasing output. The price of London Brent went above $114 on Friday and is currently at $113.91.
*** On the currency markets, the euro is worth $1.5802 and 79.20 sterling.
