THE National Treasury Management Agency (NTMA) is unlikely to be able to issue much-hyped "sovereign annuities" until April at the earliest, after technical issues delayed the project by about three months.
Announced in the Budget, sovereign annuities are designed to help pension funds boost their solvency by investing more heavily in high-yielding Irish government debt.
Some experts believe cash-strapped pension funds could reduce their liabilities by as much as 30pc by piling into the new scheme, which was due to be launched in January.
However, the launch of sovereign annuities has been pushed out until at least April as the Pensions Board addresses "technical issues".
Sources also confirmed the pensions industry had given a decidedly lukewarm response to the NTMA's proposals to issue new bonds that could be used for the sovereign annuity project.
The NTMA wants to issue long-dated bonds that could be "matched" to pension schemes that have liabilities that will have to be paid out over as long as 40 or 50 years.
Insurance sources initially welcomed the move, but reaction soured when it emerged that the NTMA is proposing to only pay interest of "about 6pc" on the tailor-made sovereign annuity bonds.
Bonds already on the market have commanded yields of upwards of 9pc at the height of the crisis and many are still offering yields above 8pc.
"For us, the gap is too big," said one executive at a major life insurance company.
"The longer-dated bonds would be better for us, but the benefit of that doesn't justify the difference between what the NTMA is offering and what we can get in the market."
The position was echoed by several of his peers, who said that while they might buy "some" of the NTMA's new bonds, they were likely to focus their attentions on bonds already in the market.
Pension companies can create sovereign annuities using existing bonds, but the impact on their deficits will be smaller because they won't be able to assume payment over an extended period of time.
"It's something that should sort itself out over time," said one source.
"As we go out into the market and start buying 10-year bonds and 15-year bonds, the yields on those should come in, so the gap [with what the NTMA is offering] becomes smaller."
The NTMA is believed to be reluctant to pay significantly more for pension fund money than the 5.8pc payable on Ireland's bailout.
Even paying 6pc would mark the highest interest rate paid by the Irish sovereign, since last year's debt issuances at the height of the crisis had a maximum interest rate of 5pc.