Actuaries have urged European companies to avoid overstating their pension scheme funding position as financial corporate bond yields have skewed accounting methods and could cause more pain when the market settles after the credit crunch.

In its European Pensions Briefing, actuary Lane, Clark and Peacock warned companies to consider the long term consequences of improving their schemes' funding positions by using higher corporate bond yields pushed up by financial in the index, which look on increasingly unstable ground.