Insurers, pension funds hit hard, voice alarm

Paris

WHILE borrowers rejoice at the ultra low and even negative interest rates in Europe, savers fret and life insurance companies and pension funds face what is virtually a mission impossible.

Despite a spike in sovereign bond yields in the past couple of weeks, levels still remain ultra-low. The rate of return to investors on benchmark 10-year German and French bonds has stayed below one per cent in recent months and the yields on long-term Swiss debt even went negative. Sovereign bonds are very important for long-term investors as they are a safe investment that allows them to lock into guaranteed returns.